The real estate prices should crash for the economy to revive

Where is the slump in real estate? Builders with black money and other investors with black money accumulation have been investing in real estate expecting a further boom which is unfortunately not taking place and it is a sign of strength in the Governance standards.  In fact real estate prices  should have a real crash so that middle income and lower group of people  can think of having some shelter. The approach to curtail black money deals and the expectation that all transactions including the real estate transaction would have to be routed through banking channels with proper tracking with PAN numbers and linking with IT returns, people with black money who are the major investors in real estate may perhaps be avoiding real estate deals. It is a very good signal and the real estate should crash which will help the economy to be back on the growth trajectory.  Nobody is able to afford thinking of doing any economic activity thanks to exorbitant real estate prices  and this slump should result in a crash and economic activities need a revival. The inflation which is killing the economy and the poor alike will also come down if real estate prices are kept as low as possible. 

Dr T V Gopalakrishnan

Rupee valuation and Exports

Value of rupee is not the issue for giving a boost to exports , but the issue is that of  ease of doing business and taxation policies. The economy cannot deliver based on hopes , expectations and aspiring good days will come at a later time. The bureaucracy should have a change in mind-set and the atmosphere should be made conducive and suitable for business environment. The economy is missing lot of opportunities to perform well in all fronts taking advantage of the political support,  favourable external environment  and domestic potentials available thanks to narrow mindedness of bureaucracy to open the economy with all possible reforms in the area of administration, taxation, banking and finance, trade and commerce, and agriculture.

Dr T V Gopalakrishnan

Is it ok to incentivise bad bank management and equally bad borrowers?

The induction of additional capital to PSBs using common mans' money is nothing but incentivising accumulation of bad debts and recognising the bad management for their non professionalism. Using tax payers' money to finance badly run public sector banks and driving good money after bad money by inducting additional capital reflects only the laxity in Governance standards expected of the new Government and following the beaten track so far travelled by the previous Governments. This can never improve the functioning of PSBs and discipline envisaged from borrowers who believe in looting the banks at the cost of all stake holders of banks and the economy. Such an approach definitely cannot stand business ethics and management prudence.

Dr T V Gopalakrishnan

Lessons people are learning / Not Learning Perhaps.

No politician will learn a lesson and it is not necessary also to learn. Voters have to learn the leson that politicians will  not and cannot deliver and voters have to act wisely with the best of options they have at the time of election without any expecations. Analyse the promises and enjoy on hopes. After 67 years of Independence we are only talking of Swatch Bharat, Financial Inclusion and providing  some of the essential basics for human beings to survive Viz toilets, water, shelter, clothes and health care. Crores and crores  of rupees are getting looted from tax payers Money towards providing these for decades and even now  only the talks are on and on these matters. The number of people who have become  Millionnaires / billionnaires and those who are getting marginalised without any hope for survival are on the increase year after year and  the politicians can definitely encash on the latter figure to capture votes. This is perhaps the lesson learnt to come to power and remain there.  people are learning the lesson that nothing will and can happen in this great economy. 

One of the greatest lessons in life is to believe in one’s own destiny while continuously striving to enrich knowledge, wisdom and vivek — the capacity to distinguish right from wrong and act with maturity and balance.

A meaningful and dignified life is built not merely on material success, but on adherence to ethics, values, discipline and a sound code of conduct. Hard work, integrity and self-restraint elevate a person far more than the blind pursuit of wealth, power or position.

Greed and excessive desire for authority often weaken judgment, disturb peace of mind and erode character. On the other hand, simplicity, ethical living and clarity of purpose strengthen both the individual and society.

True success lies in living with self-respect, contributing positively to others and leaving behind a legacy of trust, wisdom and good conduct rather than merely accumulation of riches.

The most valuable lesson one can learn perhaps is Believe in One's own Destiny and work hard to enhance knowledge, Wisdom, VIVEK and adhere to the best of one's capacity the principles of Code of conduct and ethics and values of life to lead a dignified life without developing any greed, lust for power and wealth.  

T V G Krishnan

(personal Views )

Recapitalisation pf PSBs

This refers to your editorial ‘Recapitalisation of PSU banks must be based on performance’ (business Standard dated 24/6/2015). The need to strengthen the capital base of public sector banks in the context of ever increasing business and business risks is paramount but driving good money after bad money particularly tax payers money needs to be given a serious thought in the background of banks’ continuous bleeding thanks to staggering non performing loans and deteriorating performance of non professional boards. As rightly observed, the money distribution should be based on performance and the  performance criteria should be on the basis of banks contribution towards GDP growth, capital formation in the country, capital output ratio, industrial and agricultural expansion, financial inclusion, gross non performing assets and loans and the Customer service efficiency ratio. The boards’ performance cannot and should not be simply assessed based on the balance sheet size which often and invariably gets lavishly window dressed. Also, the banks cannot and should not take for granted the capital support from the budgetary sources and this needs to be achieved through their contribution to improve the over all economic development and inclusive growth. Make the Banks’Board professional and fully accountable before support is extended.

Dr T V Gopalakrishnan

The gap between the Government and the RBI

Government has a political cum economic agenda whereas RBI has only the economic agenda. The Government takes half hearted measures to keep a balance between Politics and Economics and the RBI takes measures based on the possible results of the Government action  on the economy. The fact of the matter is that the economy has not picked up strength as the Government believes and talks and this RBI has boldly brought out in its recent credit policy perhaps for the Government to get a clue. Despite this, RBI cut the repo rate by 25 basis points is only to pacify the Government and satisfy the market sentiments. No doubt Government has lot of very good intenstions to take the economy forward and has been taking all possible steps , but it has its own limitations as there is an opposition, there is a bureaucracy and  there are fiancial constraints. RBI maintains its stance and will always be supporting the growth with price stability.The environment should be conducive and for this the Government has to take the initiative.  

Dr.T.V.Gopalakrishnan

(This comment sent to ET dated 5/6/2015)

Window Dressing, Human Brain and Technology

Window Dressing of Banks' Profit and Loss accounts and balancesheets has been in vogue for decades and gets highlighted, criticised and  banks are warned every now and then without any tangible result.Top management and the auditors have an understanding and they decide what should be the size of Balance sheet, the profit, the level of NPAs, the growth in deposits and advances. Creative accounting , it is believed will end when technology got into banks but Indian Brains are superb and manipulative mind works wonders to outsmart technology. The balance sheet consists of only 11 itmes or so and all these 11 items except perhaps the paid up capital  and cash are all adjusted figures to suit the top management to provide an impressive picture to the RBI, Government, investors,competitors and anybody who keeps a watch on banks' performance. It is an age old practice and there are specialists accountants and auditors who are very clever to camouflage what is not good and project and look impressive what is really bad. No bank can be an exception is the reality and the NPAs disclosed are not the real picture. One can easily double the figure. Hidden NPAs are the products of banks'inefficient and unprofessional management. While stake holders bear the brunt, the management gets the incentives by way of bonus. More they hide NPAs, more they get as bonus. Is the Government really serious to fix the issue of window dressing? In that case  a lot will have to be done right from the appoinment of banks Board of Directors to the finalisation of auditors who finalises the final accounts.  

Dr .T.V.Gopalakrishnan

( Comment sent to BS)