Wednesday 25 September 2019

Quick Decisions ?

Today’s Economic Times carries following news :

Nitin Gadkari pitches for faster decisions by judiciary, banks and govt to boost growth

Extract :

# Union minister Nitin Gadkari made a strong pitch for quick decisions by the judiciary,

banks and the government along with immunity from punitive action for bona fide errors

to help accelerate economic growth, create jobs and combat poverty.

# I am okay with people taking wrong decisions, but I dislike honest people not taking

decisions,” Gadkari told the panelists and the audience

# Further, Gadkari said bankers need to act quickly while the government should

encourage them to take decisions without fear

# He called for stern action against mala fide actions. “But you have to find out if the

mistakes are bona fide or mala fide. If there’s a problem because of business cycles, or

global demand and supply, we should not make them (the bankers) responsible. It’s time

for the government to support them,” Gadkari said.

# This over-cautious and conservative attitude is a problem,” he said.

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Dear Shri Gadkariji,

It is easy to understand your frustration at this “ over-cautious and conservative attitude “

The reason behind this attitude is :

No honest decision-taker wants to stick out his neck – only to get it chopped of , a few months / years later ( of course, after due “ witch-hunting “ by CBI – ED – CVC etc ) , for a bona fide and honest mistake

This attitude can be changed by implementing my following E Mail :

To Err is Human [ 20 June 2014 ]

Extract :

To encourage Babus and Ministers to take FAST decisions , PM Narendra Modi must insist that they carefully " Record " on the files :

* What info / data he wished was available for a better decision

* What different " views / opinions " were presented to him for consideration

* What " Data / Views " he would have obtained if he had more time

* Who all , the decision might offend

* What is the likely " Cost " of postponing that decision

And finally a declaration as follows :

“ THIS DECISION IS NOT LIKELY TO BENEFIT ANY OF MY NEAR RELATIVES / FRIENDS ,

DIRECTLY OR IMMEDIATELY “

After all of this , if the decision appears to be " Wrong " in hindsight , it must be " forgiven " and treated as an honest error

To err is human !

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Dear Shri Gadkariji,

If you propose to implement my above-mentioned suggestion , I am sure , you will find total support, not only from Shri Modiji, but also from all the bureaucrats

Here is the proof :

Only yesterday , in a conference of American Business Leaders in New York, Shri Modi said :

“ The economic reforms that we announced in the past 4 months, is just a beginning . In

the months and years to come, you will see many – and much bigger – decisions “

And 2 years ago, Shri Modi had said in a meeting of the bureaucrats :

“ If a decision is taken with honest intention , truthfulness and for the welfare of the

public, nobody can raise a finger at you

Something momentary may happen , but I am with you “

Source :

Take decisions fast, don't fear consequences: PM Modi tells bureaucrats [ 22 April 2017 ]

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26 Sept 2019

Rsvp : hcp@RecruitGuru.com

Saturday 21 September 2019

Something is better than Nothing

That could be said about the following news :

Jobs data accounting for small businesses soon [ Hindustan Times / 22 Sept 2019 ]

This set of data will also count proprietary shops or self-owned, self-operated businesses which may have no hired labour, such as a roadside vendor.

The establishment-based survey by the labour bureau

Highlights :

# The country’s first periodic labour force survey (PLFS) for July 2017-June 2018 released

by the government in June showed an unemployment rate of 6.1%, the highest in about

four decades.

# The last “unemployment-employment survey” was carried out in July 2011-June 2012,

according to which the all-India unemployment rate was 2.7%.

# In 2018, when at least 28 million people applied for about 90,000 vacancies announced

by India Railways, the country’s biggest employer

# In any jobs survey, people with jobs are categorised as employed.

People without jobs but looking for work are considered unemployed

# The labour force participation rate is sum of :

[ people who are employed + people who are not employed ]

In a rough-and-ready sense, the unemployment rate then is simply :

{ number of unemployed / the labour force } x 100

Above findings must be read in conjunction with the following report prepared by Labour Bureau :

Mudra loan reality check: Each job costs Rs 5.1 lakh; only 20 percent borrowers started new business [ Financial Express / 04 Sept 2019 ]

Highlights :

# The draft report has found that as many as 1.12 crore additional jobs were created

during the first 33 months (April 2015-December 2017) of the implementation of the

scheme

# Break-up of these 1.2 cr “ additional jobs “ :

Ø self-employed or working owners, including unpaid family members…...................... 51.06 Lakh

Ø employees or hired workers ………… 60.94 Lakh

Ø only one of five beneficiaries (20.6 per cent) availed the Mudra loan for starting a new business while the remaining applicants used the Mudra money for expanding their existing business.

Ø The report also said that the number of additional jobs created in 33 months was less than 10 per cent of the total number of loans

Ø During the first three years, Rs 5.71 lakh crore of loans was sanctioned

Ø The loans provided under Shishu category led to the creation of 66 per cent new jobs. The new job creation percentage for loans under Kishor and Tarun categories were 18.85 per cent and 15.51 per cent respectively.

Ø Dividing the total amount of loan disbursed by the number of additional job created, one comes to the conclusion that around Rs 5.1 lakh in Mudra loan was extended for creation of each additional job

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Above findings must be read in conjunction with my following earlier Email to the Cabinet Ministers :

How much Capital to create One job ? [ 22 June 2017 ]

Extract from above-mentioned Email :

Some ONE MILLION ( ten lakh ) youngsters enter the job market , EACH MONTH

How much CAPITAL ( fixed + working ) would be required to give jobs to all of them ?

Following are my guesses to create just ONE JOB in :

· Pan Beedi shop ( self-employed )………….Rs 1 lakh

· Tiny grocery shop ( owner operated )…. Rs 3 lakh

· Barber shop …………………………………………..Rs 5 lakh

· Pharmacy shop……………………………………… Rs 10 lakh

· Auto Repair Garage………………………………. Rs 20 lakh

· Small Factory ( 50 people )……………….. Rs 50 lakh

· Medium Factory ( 100 people )……………. Rs 75 lakh

· Large light engineering factory………………Rs 100 lakh ( Rs 1 cr )

{ Just proposed SAMSUNG factory in UP will invest Rs 5,000 cr and , at full capacity , employ 5,000 people }

· Machine Tool Manufacturing factory…………………. Rs 2 crore

· Heavy Engineering factory ( Pressure Vessels )…. Rs 5 crore

· Service Industry ( based on IT / internet )…………. Rs 50 lakh

It is not difficult to see WHY jobs are not getting created , despite the fact that we have a huge DOMESTIC MARKET to serve 1.3 BILLION people !

It would require a huge amount of CAPITAL to create jobs for 12 million people, each year

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Conclusions :

# “ Mudra Loan Impact Report “ findings confirm the estimates in the above mentioned

blog / E Mail [ Rs 5.01 lakh to create each “ Self Employment “- on an average ]

# Even if motivated by yesterday’s announcement of drastically reduced Corporate

Taxes , if NEW MANUFACTURING factories were to come up, there is no way these

can create ONE MILLION new jobs ( hires ), per month !

At an estimated investment of Re 1 CRORE per hire ( in a Light Engineering Factory ), we would need investment of Rs 1 MILLION*CRORE per month !

# It is high time our Economists / Political Leaders / TV Panel Experts etc., admit this

fact and focus on creating SELF EMPLOYMENT

# In the meantime , to generate a huge CONSUMER DEMAND ( the Prime Motivator for

new investments ) , Govt should drastically reduce the Personal Income Tax , as

suggested in my following E Mail yesterday to the Cabinet Ministers :

Better late than Never

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22 Sept 2019

Rsvp : hcp@RecruitGuru.com

Friday 20 September 2019

Better late than Never

Yesterday’s corporate tax cut announcement by the Central Government, could be described as such

Over the past few years, many other countries have lowered their Corporate taxes

See details at :

List of countries by tax rates

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

This is something Companies were demanding for a long time . But it took the current sluggish state of our economy that finally triggered this action

Of course, this step would encourage those companies to now go forward with their investment plans – where these were held back due to uncertainty of the profitability

But, it would still NOT encourage any company to come forward with investment if the company does NOT see enough consumer demand for its products

Hence, can we expect Madam Sitharamanji to follow this up with a strong INCENTIVE to the consumers to loosen their purse strings and start spending to create a massive CONSUMER DEMAND ?

An incentive such as a deep reduction in Personal Income Tax ?

Or a GAME CHANGING and REVOLUTIONARY step of total abolition of Personal Income Tax ? – something which I have been advocating by sending following E Mails to the Cabinet Ministers :