GKA THOUGHTS – Page 16 – Gopal Krishna Agarwal

BJP Welcomes New FDI Policy of the Modi Government

June 23, 2016

Opening of FDI in key sectors like pharma, defense and civil aviation will give big boost to the economy by fulfilling capital requirements of the industry and help in job creation through manufacturing in these sectors.

In defense it will help in promotion of exports and self reliance in defense procurement.

In Pharmaceuticals industry which is already catering to African continent and many other third world countries and has also setup its base in US and European nations, it will help in building the multinational character for the industry.

In civil aviation the government has recently announced new civil aviation policy. The policy identifies around 350 places for setting up civilian airports, providing air connectivity. With the opening of FDI in civil aviation, several brownfield airports will start operations, increasing air connectivity network throughout the country. We already have good connectivity through roads, railways and water ways, this additional air connectivity will catelize large scale economic activity throughout the country.

Our farmers in the rural area need alternative employment opportunity and enhancement of their income. Further capital and technology is animal husbandry will help in enhancing income of the rural economy.

There are some reservation with regard to FDI in single and multi brands retail sector but these apprehension be well taken care off.

We already have strong FDI flows of more than $ 55 billion in 2015-16, up from $ 36 billion in 2013-14. By simplification and opening up of the FDI in these sectors, government is set to boost FDI flows further. At present we have large quantity of FIIs inflows which is hot money, with the increasing proportion of FDI’s inflows, the quality of money invested in India will improve.

For India to open up for economic development a proper ecosystem has already been put in place by the government. We now have a strong foundation of robust economic parameters like low inflation, stable currency, large foreign exchange reserves and transparent, corruption free and responsive governance.

It is not without reason that India is now the fastest growing economy of the world and is attracting the highest FDI. All because of the focused and committed approach of the Modi government for all round economy of the country. Over the last two years we have seen that there is a new initiative by the Prime Minister at regular intervals.

Gopal Krishna Agarwal

National Spokesperson BJP

gopalagarwal@hotmail.com

Laying Foundation For a Better tomorrow

June 15, 2016

By Gopal Krishna Agarwal,

National Spokesperson on economic Affairs, BJP

Prime Minister Narendra Modi’s recent trip to America has elevated Indo-US ties to new heights, especially economic partnership. The confidence exhibited at the India-US business conclave earlier this week is a case in point.

His government has recently completed two years in office. Going by the reports of various international think tanks land international institutions, the Modi government has set India on the fast track to growth by introducing a raft of measures to boost the economy.

Recent data from the Central Statistical Organisation (CSO) points towards the fact that the Centre’s focused approach over the last two years is bearing great results. Some people have expressed their reservations on these economic growth figures. But apart from a few well-reasoned arguments, most of the criticism is politically motivated. It should be borne in mind that the GDP now is being calculated using the globally accepted Gross Value Added (GVA) method.

With the growth rate nearing 8 percent in the last quarter of 2015-16, there is no doubt that the economy, which was left in complete shambles by the previous UPA government, is on the fast track to recovery. All fiscal parameters are on target, whether it is revenue collection or expenditure or fiscal deficit at 3.9 percent of GDP.

Per capita income has also risen to Rs 93,293 from Rs 86,879 last year. Experts believe that the economy could grow in the range of 8-8.2 percent in 2016-17. This would be backed by agriculture sector growth surpassing the 3-4 percent mark depending on the monsoon.

All these achievements are the result of the Modi government’s tireless efforts. Flagship initiatives like UDAY, PAHAL, and renegotiating Mauritius tax treaty, the revival of held up projects in roads and rural infrastructure, are showing extremely encouraging results.

These initiatives have created the requisite infrastructure and demand in the economy to attract domestic and foreign investment. Corruption-less and transparent governance in the last two years has added more than Rs 4 lakh crore to the government treasury on account of spectrum allocation, coal block, and mineral auctions, etc.

1 would like to highlight some of the key areas of focus for the government. The first focus is towards dealing with corruption and crony capitalism. Over the past 20 years, the world has been reeling under the thumb of crony capitalists. To the uninitiated, crony capitalism is a nexus between businessmen, obliging bureaucrats, and politicians. It undermines the state, distorts resource allocation and is against the spirit of equal entrepreneurship opportunities.

Through a fair judicial system, efficient regulation and transparency in political funding, one can bring positive results over a long period of time. Immediate steps to tackle this menace include the careful and transparent process of transfer of government resources into private hands, management of state-owned banks, especially their debts and NPAs, control of parking and stashing of illegal money abroad.

On this count government has been very focused and successful in its approach. In its recent edition, The Economist stated: “Encouragingly, India seems to be cleaning up its act. In 2008 crony wealth reached 18 percent of GDP, putting it on a par with Russia.

Today it stands at 3 percent, a level similar to Australia. A slump in commodity prices has obliterated the balance sheets of its wild west mining tycoons. The government has got tough on graft, and the central bank has prodded state-owned lenders to stop giving sweetheart deals to Moghuls. The pinups of Indian capitalism are no longer the pampered scions of its business dynasties.”

A point of caution is that we have to be very careful with the public-private partnership model.Under this system, crony capitalists have devised a mechanism of transferring government resources in a nontransparent manner. A case in point is the DND project in Noida.

The second important issue is the management of overall debt. The world has been witness to China’s financial problems and its debt bust. The Chinese Debt/GDP ratio has increased to 260 percent from 150 percent in a decade. The latest issue of Economist says that its problem loans have doubled in two years.

Hungry for profits in a slowing economy, plenty of Chinese banks have miscategorised risky loans as investments to dodge scrutiny and lessen capital requirements, according to The Economist. “These shadow loans were worth roughly 16 percent of standard loans in mid-2015, up from just 4 percent in 2012.”

There are many lessons India could learn from China. The Modi government has learned them well. Instead of pushing the problem under the carpet, the Modi government has tackled it head on. The ongoing clean-up of bank balance sheets will help spur economic growth and improve the lenders’ profitability. “Prompt actions are being taken on willful defaulters,” said Jayant Sinha, Minister of State for Finance.

“One of the key considerations in a situation like this, the banks should be empowered and consequently protected so that they can bring about prudent settlements,” said Union Finance Minister Arun Jaitley. “The overall operational profit of public sector banks last year was quite significant. It was in excess of Rs 1.4 lakh crore. It is on account of provisioning that the overall the PSBs declared a net loss of Rs 18,000 crore

The government has already enacted the Bankruptcy and Insolvency Code. Another set of amendments to the debt recovery legislation and securitisation legislation are before Parliament. The government is also considering setting up of Stressed Asset Management Funds.

The focused approach is not limited to empowering and supporting banks to deal with NPA menace, but the government agrees that the bad loan situation has also arisen on account of certain sectoral stresses like held up road construction, blocked environmental clearances, and dumping, among others.

The government is doing everything to restart held up projects, clearances, anti-dumping measures and do away with policy paralysis. The government has gone even further ahead and implemented the recommendations of the Nayak Committee Report like the setting up of a Bank Board Bureau.

The third important initiative is the ease of doing business. These initiatives have helped in catalysing private investments. Some of the initiatives include easy exit policy for genuine investors, repealing of about 1000 redundant laws and more to come, faster and transparent project clearance policy and better dispute resolution mechanism in the tax department where thousands of crores of individual and government resources are blocked.

There has been a reduction in the cost of collection of direct taxes from 1.36 percent in the year

2001-2 to 0.59 percent in 2014-15. The government has also initiated premature retirement and the removal of inefficient and corrupt employees from various departments. And finally, targeted and focused approach to ending corruption and black money, giving one-time compliance window to declare illegal foreign and domestic assets.

Some areas, which require flagging for the future, are labor reforms, disinvestment reforms, especially for loss-making PSUs, lowering of interest rates as demanded by business community with inflation, particularly of food items looming large, and land acquisition issues and above all the passage of the Goods and Services Tax Bill.

Narendra Modi’s philosophy of economic development is growth through empowerment. The government has not only been successful in generating resources for the benefit of the weaker sections but also spending this money to reach the target beneficiaries in a transparent manner.

With the use of JAM and direct benefit transfer (DBT), the government has plugged leakages and created additional revenue for social security. The government has given them social security and also generated widespread demand to boost the economy.

The resources at the command of the government are being utilised to build rural infrastructures like toilets in rural areas, electricity to each and every household, housing for by 2022, irrigation and rural roads.

Employment opportunities for the weaker sections are being enlarged through Skill India, Startup India Stand-up India and by easy access to loans under MUDRA Bank. The real game changer in the near future will be the doubling of farmers’ income through reduced cost, better national market access facilities, risk mitigation through user-friendly crop insurance cover, soil health card, efficient irrigation like drip irrigation, neem coated urea and digitisation and reforms of land records, etc.

Truly this government is focusing on the development of all sections of the society across cast, creed, religion and geography. As a result of this focused approach, India has become one of the fastest-growing major economies in the world and has been able to attract largest Foreign Direct investment (FDI). We are sure that the government will not sit on its laurels. There is much more in store.

This Glass of Half Full

October 28, 2015

The recent rate cut by the RBI is expected to provide significant support to the Indian economy The RBl and the central government have now decided to work together to ensure that the cumulative rate cut of 125 basis points is transmitted across the board.

India is moving to a low interest rate regime. Now is the right time for the government to capitalize on the rate cut and move quickly on other administrative and legislative reforms. The Indian economic model is very different from the Chinese one Unlike the export-driven Chinese economy. India is domestic demand-driven and there is no excess capacity of the kind now being witnessed across China.

One reason for the low rate of investment in India is the lack of demand.

This should recede as soon as demand picks up. The lack of good and efficient physical infrastructure provides the government with an opportunity to ramp up public expenditure in sectors that would naturally be crowded with private investment. Taking cue From this, the government had planned large scale investments in infrastructure. These are in addition to the mega investment plans unfurled by Prime Minister Narendra Modi like Digital India’, Make in India’, Start Up India’, smart cities, power sector reforms and coal block auctions.

The manufacturing sector is competitive and is not subsidy dependent like the Chinese counter part. The trickle of investments from abroad under schemes like Make in India’ should soon turn into deluge once the various steps being taken by the government kick into action. The panic driven flight of global financial capital will hopefully reverse in the near future as India provides the best risk adjusted returns on Investment to this capital.

Because of this government’s over-emphasis on the goods and services tax and Land. Acquisition Bill, many in the corporate sector seem to be losing sight of the multiple steps being taken by the Centre. The government is seeking to establish an overarching framework under which citizens entrepreneurial potential can flourish.

“This is what minimum government. maxium governance’ is all about.

The business sector can be excused for its impatience. With the lack of major reform during the previous regime and 17 months of the Modi government down the line, India Inc is desperate For action.It is seeking palliatives while the government is committed to structural change. A good example of this is the issue of land acquisition.

After strong opposition by various political parties, the government has decided to allow state governments to have their own land acquisition laws.

This, at once, converts a potentially political showdown into a great opportunity for the states to come with their own laws. A healthy competition between states will ensure that the policy is attractive to industry while state-level politics is expected to ensure a fair deal to the farmers. An issue that has also attracted major attention is that how India should focus on the gross value added (GVA) in these times of tax collection and falling subsidies. The GVA has increased from 6.1% to 7.1% of GDP showing that the economy is gathering momentum, rather than being stagnant.

The picture, however, is not rosy. The banking sector, for instance, has emerged as a weak link in the current narrative. The public sector banks (PSBs) are saddled with massive non performing assets (NPAs) and restructured loans of doubtful quality. This is coming in the way of credit flow.

The government has taken a number of steps to restore vitality to the PSBs, including restructuring capital and professionalising the bank management. Steps like putting the focus on micro, small and medium enterprises (MSME) sector finance through Mudra Bank and new initiatives of payment banks will bear fruit in the near future. A free-float currency also provides the RBI with more headroom to take steps to manage capital flows.

In the debt market RRI policy has allowed government to borrow 1.2 lakh crore inter nationally over the next five years, giving ample opportunity to the government to take up mega investment plans, generating the much needed demand push to the economy. Even the private sector has been per mitted to go for cheaper external commercial borrowings (ECBs).

The economy is gathering momentum and its underlying fundamentals remain strong. India has a government at the Centre that is committed not only to maintain this momentum but to also take steps to further accelerate the growth rate. Opportunities await.

देश विकास के पथ पर विपक्ष को रास नहीं

October 23, 2015

गोपाल कृष्ण अग्रवाल

राष्ट्रीय प्रवक्ता भाजपा

नई सरकार बने अभी ज्यादा समय नहीं हुआ है, देश की जनता को लगने लगा है कि अब देश की वागडोर एक ईमानदार और विकास पुरूष के हाथ में हैं। जिस तरह से मोदी जी के नेतृत्व ने भारत की विकास दरों को नई ऊँचाइयों पर पहुँचाया उसे देख विश्व के बड़े से बड़े पुँजिपतियों में भारत में निवेश करने की होड़ लग गयी है। इसका प्रमुख कारण भारत की बढ़ती हुई अर्थव्यवस्था, दुसरे और देशों के तुलना में भारत में ज्यादा मुनाफा है और मोदी सरकार की स्पष्ट व्यापार नीति है। यूपीए के समय में व्यापारियों का विश्वास सरकार पर घट गया था, अब मोदी सरकार के समय यह लौट आया है। भारत में पढ़ा लिखा युवा बेरोजगार होकर निराश हो जाता था इस देश में 65 % युवाओं को यूपीए सरकार में रोजगार के लिए दर बदर भटकना पड़ता था। अब उनके लिए नए नए अवसर मिल रहे है। मोदी सरकार उनके लिए एक वरदान सिद्ध हुई है। हर क्षेत्र में विकास का डंका बज चुका है जिससे विपक्ष के होश उड रहे है। उनकी राजनीति दाव पर लगी है उसपर विराम लग चुका है, उन्हे भारत का विकास हजम नहीं हो रहा है। कांग्रेस 65 साल के बाद अब विकट स्थिति में है, अलग – अलग दावपेंच अपना रही है। दुनिया को तो भारत का विकास दिख रहा है पर राहुल गांधी जी को भारत की बढ़ती विकासदर दिखाई नहीं देती है।

1980 में अमेठी के किसानो की 65 एकड जमीन कांग्रेस ने हड़प ली, और किसानो से कहा कि वो साइकिल फैक्ट्री बनायेंगे, लोगो को रोजगार देंगें। और अब सच्चाई ये है कि आज भी उस जमीन पर ना तो कोई कारखाना लगा और न ही किसी को रोजगार मिला है और तो और उस जमीन को राजीव गांधी ट्रस्ट को दे दिया गया है। कांग्रेस का इतिहास देंखे तो एक के बाद एक घोटाले देश के सामने उजागर हुए। जनता का पैसा लूट कर पार्टी के राजनीतिक हलकों में पहुंचा दिया गया जिसकी वजह से देश की अर्थव्यवस्था चरमरा गई।

अभी हमारे सामने बिहार का महत्वपूर्ण चुनाव है। बिहार में इस बार विकास के लिए मतदान होगा। जातिवाद को खत्म कर विकास की राह पर चलने का फैसला बिहार की जनता का स्पष्ट दिख रहा है। जनता की बदलाव की इच्छा इस बार की बढती वोटिंग प्रतिशत से साफ नजर आ रही है। विधानसभा के पहले चरण में जनता ने लगभग 57 % मतदान किया है। जोकि 2010 में 50.85 % था। दुसरे चरण में 55.14 % मतदान किया। जोकि 2010 में 52 % था। पहले चरण में महिलाओं में अधिक उत्साह दिखा करीब 59.5 % महिलाओं ने मतदान में हिस्सा लिया है जबकि 54.5 % पुरूषों ने मतदान किया है। महिलाओं का अधिक मतदान करने का एक महत्वपूर्ण कारण है कि पूर्व में बिहार में जिस तरह से ग्रामीण क्षेत्रों में शराब के लाइसेंसों में वृद्धि हुई है उससे महिलाएं परेशान है। एक दशक पहले 779 शराब के लाइसेंस थे और अब संख्या 2360 की हो गयी है जनता दल की सरकार में शराब से राजस्व की हिस्सेदारी 2007 में 10.38 से बढकर वर्ष 2014-2015 में 18 % हो गई है जिसको लेकर ग्रामीण क्षेत्रों में शराब बिक्री के खिलाफ महिलाओं के द्वारा वर्ष 2012-13 में दुकानों पर धरना देने के कई उदाहरण आपको मिल जायेंगे।

नीतीश जी के राज्य में विकास का जो वादा था वह भी नहीं दिखता है। भागलपुर से पटना शहर को जोडने वाले 80 किमी. के राष्टीªय राजमार्ग पर किसी का ध्यान नहीं है। नीतीश कुमार की सरकार ने वर्ष 2005-06 में एक लाख करोड़ के निवेश और जो 2350 मेगावाट क्षमता वाले एनटीपीसी थर्मल पावर स्टेशन का वादा किया था आज 10 साल बाद भी कुछ नजर नहीं आता है। औद्योगिक परिदृश्य मुंगेर, बेगुसराय, समस्तीपुर, गया जैसे शहरों में बहुत अलग नहीं है। समस्तीपुर में चीनी मिल बंद होने से 2000 परिवारों का रोजगार छिन गया है। जनता को इस बार विकास के लिए मोदी सरकार पर भरोसा है। लालू जी को तो सिर्फ जातिवाद और गौमांस जैसे मुद्दे पर राजनीति करना है। अभी उन्होने बीफ पर जो एक विवादित बयान दिया है कि, हिन्दू भी बीफ खाते है, ऐसा कहना हिन्दू समाज के लिए बडी पीडा देने वाली बात है। एक बात हमें ध्यान रखनी है। कि हिन्दू समाज गाय को पूज्य मानता है इसलिए गौमांस त्याज मानता है। दूसरी तरफ मुस्लिम सुअर को गंदा मानते है इसलिए उसके मांस का भक्षण नहीं करते। दोनो में वैचारिक असमानता है जिसके कारण गौमांस और सुअर के मांस भक्षण में भेद है।

साहित्यकारो के अवार्ड लौटाने पर भी चर्चा जोरो पर है। यह एक विशेष विचारधारा के लोंगो के घटते प्रभाव के मद्ददेनजर हो रहा है। साहित्यिक क्षेत्र का राजनीतिकरण नहीं होना चाहिए। विचारों में बदलाव एंव प्रगति ही जीवन का लक्षण है। किसी एक विचारधारा विक्षेष का प्रभाव सामाजिक जीवन पर नहीं रह सकता है। बदले राज्य परिपेक्ष्य में नई विचारधारा सामने आयेगी ही।

gopal.agarwal@bjp.org

Prime Minister Narendra Modi’s Focus on Entrepreneurship: Startup India, Standup India

Last month, India’s Prime Minister visited Silicon Valley where he interacted with world’s top entrepreneurs like Facebook’s Mark Zuckerberg and Tesla’s Elon Musk. He spoke about his commitment and vision to “Startup India, Standup India”. Earlier in his Independence Day speech, Modi had announced a new campaign ‘Startup India; Stand up India’ to promote bank financing for startups and offer incentives to boost entrepreneurship and job creation in the country.

Modi Ji wants that government should focus on Innovation and entrepreneurship as they are the main solution to create job opportunities in India. The BJP government is committed to promote startups and entrepreneurship in India at a very big scale. To achieve this target BJP government plans to incentivize entrepreneurship and create conducive ecosystem for startups.

Some of the proposed initiatives are:-

A) Low Taxation regime and Tax breaks – Many countries exempt startups from tax to encourage them. Tax breaks for investors and even employees for things like Esops (employee stock options) will help us attract more talent, create more jobs and up the risk appetite. Finance Minister has also specifically committed that corporate tax will be reduced to 25% in near future.

B) Easy Approval Process – Starts up will get easy approval process so that they can easily promote their business and get capital from venture capitalist and angel investors.

C) Incubation centres – The government is talking to premier engineering schools such as the Indian Institutes of Technology (IITs) and National Institutes of Technology (NITs) to reactivate incubation centres for providing a plug-and-play model for startups

D) In 2015, venture capital (VC) investments have hit an all- time high. After May 2014, when BJP came to power venture capital fund activity increased to a very large extent. As per government reports, the July-September quarter saw a 41 per cent rise in comparison to the same period last year, which witnessed 79 deals worth USD 264 million.

E) Mudra Bank Initiative – To benefit 5.77 crore small business units, government launched MUDRA Bank loan scheme, which will provide credit of up to Rs 10 lakh to small entrepreneurs without collateral and act as a regulator and provide refinance for ‘Micro-Finance Institutions’ (MFIs).

F) Easy Exit Policy (Bankruptcy Act) – Modi government is making exit norms easier for startup by bringing new bankruptcy act in the coming session of Parliament.

G) Low Interest Rate Regime – The economy has entered a low interest rate regime with the latest monetary and credit policy. This is helping government to focus on investments and also help Startups to get capital at low interest rate.

H) Lower compliance and simple registration process for small and medium enterprises.

Gopal Krishna Agarwal

National Spokesperson BJP Gopal.agarwal@bjp.org

A big opportunity waiting to be tapped

September 20, 2015

By Gopal Krishna Agarwal,

With slightly over 20 million demat account and around 5 million retail investors, there is a humongous opportunity waiting to be tapped. This not only makes business sense, but is also in the interest of our country where investment needs are mind-boggling. It is time for the discount broking firms to join other industry players to work for increasing the size of the market.

Discount brokerage is only around five years old in India, while it has been around for over two decades in the more advanced financial markets like the US, where it continues to exist with the traditional broking firms. Although the emergence of discount broking has not rung the death knell for traditional brokerages or full-service broking firms yet, it has been causing a lot of anxiety to the market participants. Investors in every market are mostly swayed by the price and cost transaction, but there are also discerning buyers who don’t mind paying a higher price, provided the value proposition is right As the term itself suggests. The USP of discount broking is its extremely low rates of commission. As far as services are concerned, it offers none, except trade execution. Full-service broking firms, on the other hand, offer an entire gamut of services, ranging from research reports and trading inputs to financial planning and wealth management. Therefore, both cater to two different segments of the market.

Discount broking is meant to attract day traders who, otherwise, end up paying high brokerage on their trades. It also attracts more enterprising investors who, like the day traders, do their own research before investing. With the explosion of mass media, multiple sources of information are available to investors, mostly free. So, they are no longer dependent on brokers for information to guide their buy and sell choices. Such investors, however, are few and far between.

Investors who cannot follow financial markets either due to lack of time or skill would continue to remain with the full-service broking firms, as they depend on their research, recommendations and trading tips, since they mostly follow the buy-and-hold philosophy. Traditional brokers also retain the advantage of human factor. Investment in equities is complex and a little handholding is always welcome. Hence, a large number of investors prefer investment advisers with whom they can talk and interact. The traditional broking firms will deal with the emerging competition with discount brokers by either moving up or down the value chain. One way to deal with it is to unbundle the services and offer them accord- ing to the prospective client’s willingness to pay. Thus, within the same broking outfit, one can either opt for discount broking or a more premium service, where brokerage is bundled with research or market reports. We are already seeing this happening

Since the traditional firms will only be able to charge a higher brokerage for value-added services, their quality of research is likely to improve, which, in turn, will also upgrade the overall resilience and quality of information in the market. Some of the smaller brokerages whose research reports are not worth the paper on which they are printed would either have to improve their quality drastically or downgrade to discount broking. This might also lead to consolidation in the broking industry, as with falling margins and increasing compliance and regulatory cost, firms would try to achieve a certain size to reap the economies of scale. So, before discount broking and the accompanying cut-throat competition becomes a menace, market regulator Securities and Exchange Board of India (Sebi) should relax the norms governing the merger and acquisition of broking business to help the industry to consolidate. Even the exchanges need to do a lot with regard to fees, while the government must change the several tax laws to facilitate mergers and acquisitions

We believe that following Iite approach, Luddite think this matter is in nobody’s interest. We work in the equities market where the investors reward enterprises that do well and penalise that don’t So, to demand any kind of restriction on discount broking runs against the basic philosophy of the stockbroking business. So, no matter how much we insist on curbs, the desired results will not be achieved in a free market scenario.

It is for this reason that the Association of National Exchanges Members of India (ANMI) had reservations regarding the demand of a regulation on minimum broker age. It is likely that some of the traditional broking firms might perish in the face of this new challenge, but then, more efficient and innovative firms would replace them. This is the perennial gale of creative destruction that Joseph Schumpeter so eloquently talked about

It is pertinent to note that the cost of brokerage has never held back investors from the equity market, and to expect that discount broking will usher in equity culture in the country is completely misplaced.

With slightly over 20 million demat account and around 5 million retail investors, we have not even scratched the surface properly; there is a humongous opportunity waiting to be tapped. This not only makes business sense, but is also in the interest of our country, where investment needs are mind-boggling. It is time for the discount broking firms to join other industry players to work for spreading financial literacy and increase the size of the market.

The relentless march of technological advancement brings with it changes, some of which are disruptive in nature, but the human effort has always been to rise up to it. When the settled way of things change abruptly, there is fear of the unknown and even some overreaction, but then that is not wholly unexpected. This is not the first time that there has been a major shift in the way business is done in the stock market. We have covered a long journey from meeting under the banyan tree in Mumbai to hiding behind computer screens and executing trades at the speed of light.

Gopal K Agarwal is national convener of the BJP economic cell.

Capital Markets: an instrument for Capital Formation

July 4, 2015

By: CA Gopal Krishna Agarwal, President

Association of National Exchanges Members of India

For the good of the public at large we need employment. Employment generations can’t come without economic development. Which is turn requires investment. Investment is possible either through FDI or domestic saving and capital formation.

Our over dependence on FDI will not lead us anywhere. When whole world including countries like US, Australia are running after FDI and so it becomes a scarce commodity and highly unlikely for us to stand against this global competition. Therefore we have to search for domestic avenues for capital formation.

The objective of the capital market is to channelize savings to entrepreneurs in the form of debt and equity. With the Indian stock markets hitting records levels every day, some uncomfortable truths have been lost sight of. Firstly it must be accepted that stock exchange index (Sensex, Nifty etc) is not the barometer of the capital market but at best a reflection of the sentiments and future expectations. Health of the capital market depends on liquidity and retail participation, both of which are missing in the current stock market. Only when the capital market is healthy, it can perform its role in capital formation.

The Indian public does hold assets for very long periods of time, they start buying jewelry when a girl child is born, they invest in government bonds like Kisan Vikas Patra, invest in land. The long term nature of their savings is perfectly suited to the needs of the economy which needs to undertake investment projects with long gestation periods and therefore these savings need to be tapped into by introducing newer products. It is time instruments like Silver ETF, delivery based trading on Currency Exchange are introduced. New products will bring in new investors. A case in point is Gold ETF which had Rs. 7,188 crores asset as on 31^st December 2014. The total asset under management under Gold and other ETFs and Fund of Funds that invest overseas was Rs. 16,558 crores as per SEBI’s latest data. While this pales in comparison to the total AUM of the Mutual Fund industry which stands at over Rs. 10 lakh crores, it must be accepted that these newer instruments have brought in new investors to the market.

Financial literacy is of utmost importance to familiarize people with the working of the financial markets and its various aspects and must be promoted vigorously. It, under no circumstances should lead to an impression that we are moving towards ‘caveat emptor’. One of the biggest reasons for people to not invest their hard earned money in the stock market has to do with it image, where fortunes are made or lost depending on the luck. For every story in their circle where someone has made money in the stock market, there are others where people have lost all their money. More often than not the loss would be the consequence of bad stock selection, faulty trading strategies or simple greed.

The government must gradually list all the Public Sector Enterprises else all the money would be chasing only a few stocks leading to unsustainable valuation and the consequent disappointment. Government should not look at the listing of companies from the narrow prism of raising resources to overcome fiscal constraint or to invest in other sectors. It has been seen that the governments taps the primary/secondary market only when it faces the resource constraint. A welcome approach would be to look at disinvestment as a method to supply good quality stocks for people to invest in.

The Jan Dhan Yojana for financial inclusion has been a stupendous success and has been making news across the globe. We must try to find ways to bring/encourage these people to save through financial investments, rather than in physical assets. This one scheme if properly capitalized upon could be the most significant step in puling people out of poverty.

Regulators should realize that the whole financial system with all its stakeholders needs to be protected to protect the retail investor. The latter cannot be saved by placing undue regulatory burden on other market participants. For example the broking industry suffers from the lack of participation of the retail investor, over regulation and high cost of transactions. The number of registered brokers in the Cash segment was 10,268 in the year 2011-12 while that of the sub-brokers was 77,141. The corresponding figure as on 31^st December 2014 was 7,350 and 44,540 respectively. This means that around 3,000 brokers and over 30,000 sub-brokers have gone out of business in a short span of 3 years. The Government instead of leveraging the pan India network of brokers and sub-brokers to promote financial literacy and mobilization of savings, have been burdening them with compliances.

According to calculations done by ANMI, government levies account for 54% of the total transaction cost for delivery and a whopping 68% for intraday in the cash market. Government levies in the Futures market amount to 52% of the total cost. The benefits of long-term investor in reducing the stock market volatility are repeated ad-nauseam. They provide liquidity and ensure that the market remains efficient. Statutory levies on stock trading like Securities Transaction Tax, Stamp Duty, and Service Tax etc raise the impact cost of stocks and reduce liquidity. This hampers the efficient assimilation of information in the stock price and reduces market efficiency. To the extent stock market is considered a barometer of the economy such statutory levies interfere with the working of this instrument. These government levies has also led to a shift in the trading activities in Indian stocks to other low cost markets like Singapore. Not only the revenue generated from these levies is small, they impose a disproportionately huge indirect cost on the economy.

India needs a massive investment in almost all the sectors of the economy. Though the savings ratio of the households (as a percentage of GDP) is high a large part of it is parked in non-productive sectors like land/real estate, gold etc whereas the productive sectors of the economy are either starved of capital or face a prohibitive cost of borrowing. A worrying fact is that the gap between savings in financial and physical assets has increased. According to CSO figures in the year 2009-10 the total household savings was 25.2% of the GDP and investment in financial assets made 47.6% of this. According to the 1st revised estimate for the year 2012-13, this share had fallen down to 32.4%. The overall household savings rate had also fallen to 21.9% in the meanwhile. The government faces a threefold task when it comes to the savings rate: first, to raise the overall savings rate, second, to increase the share of financial assets in the household savings and third, to divert this saving towards the equity market which would be available as risk capital to the industry.

Economic development of country does not necessarily mean overdependence on foreign inflows. These funds do not come to support government’s development agenda and will disappear at the slightest hint of economic problem or to earn a marginally higher risk adjusted return if such an opportunity presents itself. Apart from many other benefits, a higher domestic investment in the equity market would also reduce the volatility in the stock markets. In conclusion it can be said that a significant part of the savings investment gap can be met domestically if we focus our attention on domestic savings and take necessary steps to link it to the wider capital market.

Farmer’s Woes, Land Acquisition Objectives Separate

June 25, 2015

By Gopal Krishna Agarwal,

Gopal Krishna Agarwal, a chartered accountant and a member of the Bhartiya Janata Party (BJP) national executive, was the chief of its erstwhile economic policy cell. Now a member of the party’s committee on the land Bill, he tells Arches Mohan how pushing amendments through an Ordinance made the people doubt the Narendra Modi government’s intentions.

What are these misconceptions?

The first is about the Narendra Modi government having removed the consent clause. Even in the Act, consent was not required for government acquisition for public purpose. Section 2 of the Act had defined 12 categories of public purpose in which consent was not required. Consent was required for government acquiring land for the private sector and for the government acquiring land for public-private partnership projects. The BJP has removed consent only for public-private partnership projects, where the land remains with the government and only for those projects that fulfill the public purpose. Schedule 4 of the Act has 13 clauses under which the government acquired almost 80-90 per cent of land that were exempt from the consent clause.

There is also confusion about whose consent. People think that the Act sought consent from the landowner. Actually, the Act sought consent from project-affected families, which was quite vague. Identifying project-affected families and whether at all they have a stake on the land being acquired was complicating the process.

Another issue is regarding the removal of the social impact assessment. It was removed because of its drawn-out consultative process, which is prone to litigation.

Why delete consent for public-private partnership projects?

We have formed the government on the promise of economic development. Development needs investment. There are only three avenues for this: foreign investment, private investment, and government spending. Our government is trying to create an enabling environment, but it is for the foreign investor to decide whether to invest in India. Private investment will not come unless there is strong demand, while the government’s coffers are empty. Public-private partnership is the route through which investments can come in for infrastructure projects.

प्राकृतिक संसाधन पर स्वामित्व सत्ता या व्यक्तिगत नहीं बल्कि समाज का ही होना चाहियें – महर्षि वशिष्ठ, राजा विश्वा

June 11, 2015

परिवर्तन विकास एंव जीवन का प्रतीक है और इसलिए बहुत आवश्यक है। परिवर्तण के परिणाम अच्छे और बुरें दोनो ही हो सकते है। अगर हमारा चितंन सतत रहेगा तो हम सही दिशा में प्रगति के पथ पर अग्रसर होगें अन्यथा भटक जाएगें।विचारों में विश्व को बदलने की शक्ति होती है।

प्रकृति के जो पंचतत्व है वे जीवन की मुलभूत आवश्यकताएं है। इनकी उपलब्धता प्रकृति ने प्रचुर मात्रा में सुनिश्चित की है। लेकिन प्रकृति का शोषण नहीं दोहन किया जाता है। गौपालन के माध्यम से हम इस दोहन की प्रकृया को बहुत अच्छी तरह समझ सकते है।

वैश्विक स्तर पर त्याग, ज्ञान और विचार का महत्व सता के अधिकार से ऊपर ही रहा है। हमारे उपनिषदों में ब्रह्मर्षि वसिष्ट, विश्वामित्र एंव कामधेनु गाय का प्रसंग बहुत प्रमुख्ता से आता है। इस प्रसंग के द्वारा भी दोनो विषय स्पष्ट होते है।

विश्वामित्र अपनी विशाल सेना सहित विजयी होकर अपने राज्य को लौट रहे थे। मार्ग में ब्रह्मा जी के पुत्र महर्षि वशिष्ठ का गुरुकुलमय आश्रम पड़ा। विश्वामित्र ने उनका आशीर्वाद लेने के विचार से आश्रम में प्रवेश किया। महर्षि वशिष्ठ ने राजा के रूप में उनका यथोचित सम्मान किया और कुछ समय आश्रम में रुककर आतिथ्य स्वीकार करने का विनम्र निवेदन किया। विश्वामित्र ने कहा, “आप जैसे तपस्वी ऋषिवर का आतिथ्य स्वीकार करना मेरे लिये गौरव एवं सम्मान की बात होगी, किन्तु मेरे साथ एक लाख से अधिक का सैनिक-समूह तथा काफी संख्या में हाथी-घोड़े हैं। ” इस पर मुनिवर वशिष्ठ ने कहा, “राजन,मेरे इस गुरुकुल में आपको और आपके सैनिक-समूह को किसी प्रकार की असुविधा तथा कष्ट नहीं होगा।

महर्षि वशिष्ठ के आश्रम में कपिला नामक अलौकिक क्षमता युक्त एक कामधेनु गाय थी, जिससे आश्रम तथा गुरुकुलवासियों को कभी किसी वस्तु का अभाव नहीं हुआ। कामधेनु की अलौकिक क्षमता से आश्रम वासियों की आवश्यकताओं की निर्बाध एवं निरंतर आपूर्ति हो जाती थी। दो दिन तक ब्रह्मर्षि वशिष्ठ के गुरुकुलमय आश्रम में मिले आदर तथा सत्कार से अभिभूत होकर विश्वामित्र ने कहा, “हम आपके इस आतिथ्य सत्कार के लिये सदैव कृतज्ञ रहेंगे। एक राजा के रूप में तो मुझे आपके गुरुकुल तथा आश्रम को कोई अमूल्य भेंट देनी चाहिए, किन्तु युद्ध से लौटने के कारण यह संभव नहीं है। परन्तु में यह जानने का इच्छुक हुं की आपके गुरुकुल में इतनी सारी व्यलस्थाए कैसे संभव हुई। जिसपर ब्रह्मर्षि वशिष्ठ ने उत्तर देते हुए कहा कि हमारे पास एक कामधेनु गाय है जो सभी आवश्यक्ताओं की पुर्ति करती है। यह जानकर विश्वामित्र ने कहा फिर तो इसे हमारे पास होना चाहिए। इसके उत्तर में ऋषिवर ने कहा, “राजन,कामधेनु गाय देना मेरे लिये संभव नहीं है। इस गौमाता की महत्ती कृपा से ही इस आश्रम तथा गुरुकुल का निर्बाध संचालन हो पा रहा है। यह हमारी सभी आवश्यकताओं को पूरा करती है। महल में तो ऐश आराम हेतु इसका दुरुपयोग ही होगा”। ब्रह्मर्षि के मना करने पर हठी राजा विश्वामित्र ने कामधेनु गाय को बलपुर्वक ले जाने का प्रयास किया। तो कपिला गाय के खुरों से असीम सैनिकों की उत्पत्ति हुई,जिससे विश्वामित्र को पराजित होकर खिन्न मन से अपने राज्य को लौटना पड़ा। द्वेष-भावना से प्रेरित होकर विश्वामित्र ने भगवान शंकर की तपस्या की और उनसे दिव्यास्त्र प्राप्त करके उन्होंने महर्षि वसिष्ठ पर पुन: आक्रमण कर दिया, किन्तु महर्षि वसिष्ठ के ब्रह्मदण्ड के सामने उनके सारे दिव्यास्त्र विफल हो गये। इस घटना के पश्चात् ही विश्वामित्र ने राजपाट का त्याग कर दिया। और उन्हे समझ आया कि ब्रम्ह तेज सत्ता की शक्ति से कहीं अधिक महत्वपूर्ण है और प्रकृति के संसोधन समाज की आवश्यक्ताओं की पूर्ति क् लिए ही है ना कि भोग विलीस कू पूर्ति क् लिए तथा सत्ता के पूर्ण अधिकीर से उनकी दुरुपयोग ही होगा।

हमारा प्रकृति का संदेश एंव गौमाता के महत्व को जन जन तक पहुंचाना आवश्यक है। गौ संदेश मासिक पत्रक एंव गौशाला का यहीं उद्देश्य भी आप सब के सहयोग एंव कृपा से आने वाले समय में हम अपनी पूर्ण निष्ठा से गौशाला का कार्य करगें और विश्वास रखतें है कि हम अपने सभी उद्देश्यों में पूर्ण सफलता प्राप्त करेंगें।

I strongly oppose privatization of water, its anti poor

June 6, 2015

MP high court stays #water supply #privatisation in Khandwa
HT Correspondent, Hindustan Times Bhopal, January 05, 2015

A division bench of MP high court stayed the handing over of water supply scheme in Khandwa town to a private company ‘Vishwa Infrastructure and Services Private Limited’ for operations and maintenance under public-private partnership (PPP) mode for 23 years.
In its interim order, chief justice justice AM Khan wilkar and justice Sanjay Yadav, while restraining the Khandwa Municipal Corporation from handing over the water supply scheme to the private firm, asked to maintain the existing water supply system till further orders.
Hearing a public interest litigation of Aam Aadmi Party (AAP) and Narmada Jal Sang harsh Samiti, the court said the petitioner has raised an issue of great public importance, in particular, likelihood of infringement of fundamental rights guaranteed to the residents of Khandwa, on account of threat of disconnection of existing water supply mechanism.
Following the high court’s interim order, AAP state president Alok Agarwal said during the recently held municipal elections in Madhya Pradesh, privatization of water supply was one of the main issues. Chief minister Shiv raj Singh Chouhan on his campaign trail in Khandwa had categorically announced that water supply will not be privatized.
However, after the elections, the Khandwa Municipal Corporation declared that existing public water supply system based on borewells and Jas wadi pumping station and treatment plant would be shut down, forcing them to move court against the decision, said Agarwal.
He further said that a wave of re-municipalization of private water contracts is currently ongoing across the world due to campaigns against water privatization by citizens and local groups like the one undertaken in Khandwa.
Re-municipalization broadly means a process where municipal bodies have decided to terminate private water supply contracts and taken responsibility of water supply services to their residents in their own hands.
It needs to be mentioned that the state government had also constituted an independent committee, constituting independent experts and people’s representatives, in March 2013 to investigate into the objections raised by the residents against the private water supply project in the town.
The recommendations of the independent committee included cancellation of the private water supply contract and operations to be undertaken by the municipal corporation, Agarwal.