LETTERS TO THE EDITOR
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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.
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.
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.
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