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The Hindu Business Line - - THINK -

Auto sec­tor blues

With ref­er­ence to “Auto sec­tor on thin ice as slow­down per­sists” (June 11) The news is a dis­turb­ing one since the ramificati­ons are wide im­pact­ing the jobs op­por­tu­ni­ties and the rev­enue share by fall­ing tax col­lec­tions. If the sit­u­a­tion in­ten­si­fies move­ment of goods could be im­pacted se­ri­ously. If cut back in pro­duc­tion and ‘plant clo­sures’ be­come a re­al­ity, as re­ported, then it would have se­ri­ous im­pli­ca­tions for the econ­omy. The gov­ern­ment must take se­ri­ous note of the is­sue and take steps to ar­rest the sec­tor’s slide.

TR Anan­dan


The auto in­dus­try must look at things from the cus­tomer’s point of view. This sec­tor is un­nec­es­sar­ily mired in ar­chaic reg­u­la­tion mak­ing the owner’s life dif­fi­cult. For ex­am­ple, in­ter­state trans­fer of reg­is­tra­tion, trans­fer of de­ceased per­son’s ve­hi­cle, and dis­posal of old ve­hi­cle, are all gov­erned by com­plex leg­is­la­tion lead­ing cit­i­zens to es­chew ve­hi­cle own­er­ship.

Cabs and self-drive op­tions are avail­able eas­ily round the clock, so cus­tomers will pre­fer these. Since the util­i­sa­tion (hours out of 24) of such cars is much higher than pri­vate cars, fewer ve­hi­cles will be re­quired, hence lower sales. It is in man­u­fac­tur­ers’ in­ter­est to work for re­form in mo­tor ve­hi­cles reg­u­la­tions.

Owning, op­er­at­ing and dis­pos­ing of a ve­hi­cle must be­come has­sle-free.

V Vi­jayku­mar


Pow­er­ing so­lar

The rapid growth of un­con­ven­tional en­ergy is borne out by com­pet­ing low cost in on go­ing so­lar power agree­ments. In ad­di­tion, the in­ter­mit­tent na­ture of their gen­er­a­tion pulls down their of­fer. To­day, coal power out­ages are due to for­go­ing pre­ven­tive main­te­nance sched­ules to re­sult in longer break­downs. Here so­lar will pro­vide the vi­tal relief to an over­loaded grid. The Na­tional So­lar Mis­sion was set forth in 2010 when crude was at $70. Mis­sion guide­lines dealt with cells and mod­ules for so­lar that form 60 per cent of to­tal sys­tem costs and that would need tax con­ces­sions.

Wal­mart, as early as 2012, in­stalled more so­lar panel ca­pac­ity on top of their stores, than the en­tire state of Florida. IKEA known for its mas­sive, ware­house-style stores, is also proac­tive on this front. In­dia needs an op­ti­mum mix of power gen­er­a­tion, as Dis­coms will need cater to an ex­pand­ing ge­og­ra­phy.

R Narayanan

Navi Mum­bai

Bad loans res­o­lu­tion

The job of a reg­u­la­tor in this in­creas­ingly un­cer­tain and glob­alised en­vi­ron­ment has never been easy. Re­serve Bank of In­dia is com­ing out with new and up­dated rules from time to time, to deal with the tur­bu­lence in the fi­nan­cial sec­tor, for which it de­serves credit.

RBI’s re­vised guide­lines now give banks greater dis­cre­tion to deal with stressed as­sets and also spe­cific direc­tions to banks on how to start act­ing in a time bound man­ner right from the day the the bor­rower misses a pay­ment.

The guide­lines also pro­vide some harsh mea­sures in the form of ad­di­tional pro­vi­sion­ing for de­lay in ini­ti­a­tion of res­o­lu­tion or in­sol­vency pro­ceed­ings. These guide­lines may seem tough on the lender, nev­er­the­less nec­es­sary given the grim bad loans sit­u­a­tion.

All these for sure will go a long way in building a ro­bust credit cul­ture and en­sur­ing greater fi­nan­cial dis­ci­pline.

Quick res­o­lu­tion of bad loans and re­cov­ery in high value ac­counts are critical where a chunk of funds are locked up un­pro­duc­tively yield­ing no re­turns for the bank.

They have got to be re­cy­cled on a con­tin­u­ous ba­sis to keep the wheels of econ­omy rolling. Srini­vasan Umashankar


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