<p>It’s a subject that’s infrequently highlighted: the quality of manpower and ‘capacity building’ – be it in banking or other parts of India Inc. It’s of a particular import to banks, but given the state-run nature of the industry, the issue gets conflated: unions, pay and lateral recruitment. Reserve Bank of India’s deputy governor R. Gandhi correctly observes that “finance is primarily a knowledge-oriented activity. The chief capital and inputs required for this sector all relate to ‘information’ and knowledge’… the paradigm changes (in the sector) has very wide ramifications; the sector is highly interconnected; happenings in this sector has high visibility”. With 72 per cent of assets under them, state-run banks have witnessed a number of younger officers at top levels over a short period of time. “While this can bring fresh perspectives, it is also a fact that given the strategic importance of leadership at the top, it is important to understand the training requirements and fulfil the same,” notes Gandhi. Cynics may say the realisation has been late in coming, but then, it’s better late than never.<br><em>— Raghu Mohan</em><br><br><strong>A Move In The Right Direction</strong><br>It is well known that there is no consistency in the structure, power and functioning of the regulatory bodies in key infrastructure sectors. While the port sector regulator’s only job is to set tariffs, his counterparts in the electricity sector have much wider powers of rule-making, licensing, power market development, imposing penalties, etc. The telecom sector regulator is tasked with promoting competition. The tenure of regulators varies from 3 to 5 years; there are different terms and conditions for reappointment of members of regulatory commissions and appellate tribunals. Some sectors like electricity and telecom have appellate tribunals, whereas others like port do not have such tribunals. Even the degree of independence of regulators varies from sector to sector. Some level of parity or uniformity is required across all such regulators. Hence, the government move to revive the Regulatory Reforms Bill, 2013, to look at these aspects, should be welcomed. An overarching law to bring uniformity to India’s regulatory architecture is the need of the hour.<br><em>— Joe C. Mathew</em><br><br><strong><strong><img alt="" src="http://bw-image.s3.amazonaws.com/bse-bull2_BLOOMBERG-mdm_0.jpg" style="width: 200px; height: 200px; float: right; margin: 4px;"></strong>Not So Wise Decision</strong><br>The market regulator’s decision to ease the listing norms for startups is tilted heavily in favour of such companies. Not only will a lot of home-grown startups be tempted to raise money from the Indian market over the next year, the move is also likely to stop their flight to foreign markets. But SEBI’s decision to allow startups to disclose less in their draft red herring prospectus puts investors at a great deal of risk. Here’s why: Through 2008, 2009 and 2010, of the IPOs that listed, 81 per cent, 50 per cent and 82 per cent of them, respectively, gave negative returns within a year. In 2014, things improved slightly due to the stricter disclosure norms brought in by SEBI. However, with the latest relaxation of disclosure norms, the percentage of IPOs giving negative returns may begin to soar once again.<br><em>— Neeraj Thakur</em><br><br><strong>Can't Blame Banks Anymore</strong><br><strong><img alt="" src="http://bw-image.s3.amazonaws.com/RBI_BLOOMBERG-lrg.jpg" style="width: 200px; height: 118px; margin: 4px; float: right;"></strong>The Reserve Bank of India’s Financial Stability Report says that stress tests at end-March 2015 suggests that the current deterioration in banks’ asset quality may continue for a few quarters. That state-run banks, in particular, may have to provide more for bad-loans to meet the ‘expected losses’ if the macroeconomic environment deteriorates. Stress tests have revealed that shocks to the infrastructure sector, mainly power and transport sub-sectors, would significantly impact the system. Before you blame banks over poor credit appraisal, the truth is that policy paralysis is the biggest driver of the bad-loan mess. Next is the political patronage extended to the bigger defaulters. Think about it: why is that the bulk of bad-loans are in the bellies of state-run banks? It’s because they are forced to be all things to all companies; it’s due to factors outside!<br><em>— Raghu Mohan</em><br><br><strong>To An Inordinate Degree</strong><br>Were college degrees to be any guarantee of the effective handling of a ministerial portfolio, life would have been much easier. The fuss over ministers misrepresenting their educational backgrounds is valid up to a point. But the inordinate attention being given to the degrees of Jitender Singh Tomar and Smriti Irani is outlandish because there is so much else politicians falsify. It is strange that we give less importance to the fact that politicians have uncountable police sentences and prison time on their records compared to their degrees. Certainly, they have no ‘moral right’ to falsify those, but the more serious issue is that of having no moral right to be corrupt or criminal. Surely, the time to have minutely examined educational qualifications is before not after individuals take up portfolios and positions of power.<br>— Mala Bhargava<br><br><strong><strong><img alt="" src="http://bw-image.s3.amazonaws.com/Monsoon-rain-shutterstock_300.jpg" style="width: 200px; height: 133px; float: right; margin: 4px;"></strong>Monsoon Mantra</strong><br>The Indian Meteorological Department (IMD) has forecast a deficient rainfall during July-August and advised the agriculture ministry to keep a contingency plan ready. In contrast, India’s lone private weather forecasting company Skymet Weather Services has predicted a normal rainfall. Incidentally, IMD’s projection of insufficient rainfall in June was proved wrong; in fact, the rainfall was 20 per cent above the forecast. Skymet claims that it has fared better than IMD in predicting rainfall ever since it began operations three years ago. We will soon know which is better. But right now, the smart thing for the farmers and the government to do is to be prepared for the worse. As for IMD, if there is something it can learn from Skymet, it should be open enough to do that.<br><strong><em>— Joe C. Mathew</em></strong><br><br><strong><img alt="" src="http://bw-image.s3.amazonaws.com/Narendra-Modi_BLOOMBERG-300.jpg" style="width: 200px; height: 133px; float: right; margin: 4px;">Modi Shows The Way Once Again</strong><br>That Prime Minister Modi is eminently fond of selfies has been evident from the start, but recently he put the hobby to good use by creating a hashtag for a Twitter campaign in support of safety and education for young girls, represented by the government’s Beti Bachao, Beti Padao slogan. The SelfieWithDaughter was quite a hit and led to a surge of photographs of parents with their daughters including from the sarpanch of a village in Haryana. Although many grumbled that the PM should become a social media manager, it is for the first time that the country has actually seen a top leader take steps to communicate with citizens in their style. Sadly, the Twitter campaign was marred, partly by the PM’s own supporters, called Modi Bhakts on the network. A defiant remark by CPM member Kavita Krishnan and abusive reaction by actor Alok Nath unleashed a flood of unsavoury tweets that completely detracted from the original aim of the campaign. The PM also received much flak for staying silent on other matters, but left to itself, the SelfieWithDaughter was a warm campaign, even if just a drop in the ocean.<br><strong><em>— Mala Bhargava</em></strong><br><br>(This story was published in BW | Businessworld Issue Dated 27-07-2015)</p>
