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Partners Column

September 24, 2015
Dear Friends, The GDP numbers for Q1 for FY 2016 are out registering a growth of 7% as against 7.5% for the previous quarter in the backdrop of deceleration in the farm, services and manufacturing sector. Government projected a GDP of 8.1% – 8.5% for FY 16 which seemed to be a difficult proposition given monsoon deficit of 28%, no signs of investment revival etc., However, the crude fell to $ 48 barrel which is close to 6 years low helping Indian economy to almost eliminate oil subsidy and reach targeted fiscal deficit of 3.6% of GDP as against 4.1% of GDP in FY 15. The global metal prices (copper, coal, iron ore, aluminum) are falling which is generally good for the Indian economy, while it could have negative impact on Indian companies operating in each of those metals. The debt recovery system in India is plagued with multiple problems, which could be one of the reasons for mounting NPAs estimated at Rs. 3 lac crores of Indian Banking system, several projects stuck at various stages and productive assets becoming unproductive.  The businesses go bad due to various factors resulting in bad loans. The mechanism should be such that these businesses are revived / rehabilitated as quickly as possible so that the assets locked with the NPAs can be put into use. We have Debt Recovery Tribunals and Securitization Act for quick recovery of loans and they have been set up with a noble object. However, in practice they have become ineffective and take substantial time in disposing debt recovery matters. While under the law prescribed, definitive timelines are 3- 6 months, in reality these are taking over 10 years due to reasons such as poor infrastructure, less number of judges / bench members etc. We have a general perception that nothing works in India, especially in government / public sector; which is not true. We have demonstrated that we have one of the best institutions in the world, to name a few – SEBI, RBI, Competition Commission, Election Commission etc., Converse to this we have  quasi-judicial bodies like CLB, SAT, DRT whose poor performance is effecting out comes which have impact on ease of doing business, health of banking system, investment climate and in general on the economy. Government should quickly address the systemic deficiencies and commit itself for the recruitment of right talent in terms of number and quality and give necessary infrastructure to deliver desired outcomes by these quasi-judicial bodies. Few of the veterans of information technology industry (Mr. Mohandas Pai, Mr. Suresh Senapaty) have recently set up a think tank to advocate conducive tax policies and effective tax administration called International Tax Research & Analysis Foundation (ITRAF) chaired by Mr. Parthasarathi Shome, former Chairman of the Tax Administration Reform Commission; which is a wonderful move.  An independent body like this would bring in unbiased and objective thinking in the interest of various stakeholders. Similar initiatives are needed for advocating simplification and objectivity of corporate laws, let’s hope somebody will champion this cause soon. Last month, I, had a privilege of speaking at National Conference of Practicing Company Secretaries in Kochi on the topic “Challenges and Opportunities of PCS in Digital World”.  Like any other business, even the professional services are prone to disruption in view of technology, globalization etc. How well we appreciate these changes and adapt to new situation will determine who will survive and succeed. At R & A, we are into a busy season drafting annual reports, holding annual general meetings, conducting postal ballots, doing secretarial audits, annual filings etc., which will continue until November. We have moved our Hyderabad office into a bigger space with better infrastructure for our people and hope the new premises will bring better service and satisfaction to our clients and us. With best regards Raghu Babu G Partner
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