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The “Market Economics”; & Defaults

by Amit Bhushan on Friday 14 July 2017, 1:05 PM | Category: Economy | View: 257 views


The “Market Economics”; & Defaults


                                             By: Amit Bhushan                                           Date: 13th July 2017


‘Markets' often behave in ways that give curious ‘economics' varied signals. We have case where private sector investments don't seem to be ‘picking up'. That is in part blamed on the ‘lack of demand' and over capacity. This is reasoned for the ‘low margins' incorporate sector as well. Then we have cases of bank defaulters where bankers are struggling for recoup of their losses. Now there seems to be a sudden pick on stocks of various listed companies on the back of ‘foreign portfolio inflows'. So there seems to be a divergence in equity valuations of the entities. On the back of Government push for improved lending we might see some of these rising stars be enabled to ‘raise fresh debts' and since projects do not seem to be attractive so takeovers or mergers/acquisition of assets/companies on the back of a mix of equity and debt is most likely. It is yet to be seen what happens to ‘public interest' in such scenarios and which netas will manage to safeguard their interest.

What we still do not have is a well-articulated code of conduct for listed enterprises as well as large borrowers. This is despite of the fact that such borrowers are using a rather large proportion of ‘public funds' however the ‘management' here continues to root mainly for the promoter's interests and this is generally for the controlling promoters rather than the shareholder in general. Due to involvement of public funds, the projects are large and there is need to keep a balance of interests of ‘all stakeholders', however the society as well as politico-bureaucratic complex continues to treat such entities as ‘private' wherein the ‘controlling management' is supported to put the ‘organization' on an even keel. It is therefore yet to be seen as to how banks guard ‘public interest' in such complex scenarios specially when they have failed to protect the interests of their depositors as well as their own ‘shareholders' which is mostly ‘public' be it individual small shareholders or the government. While we seem to having many debates around ‘quality' viz. the Quality of Education or Quality of Public Services' or Quality of Connectivity etc. however there seems little debate on ‘Quality of Management' of such Enterprises or for an overall improvement in governance of the Corporate sector especially where banks have huge exposures on these enterprises and going forward the proportion of it is likely to increase further given the push for private sector into all areas including Defense. Such corporate management & their boards including independent directors as well as bank appointees have seldom raised issues on ‘conflict of interest' on various expenses in relation to majority shareholders or demand for special audits.

While there seems to be a lot of argument floating around arguing for ‘Haircuts' or even risk-taking by promoters which ‘sometimes' leads to defaults for the ‘banking industry', however very little is put forth by the way of either argument or information about novell ways how controlling shareholders have profiteered at the cost of others including lenders. And this may be true not only for the so call ‘Right wing' but also ‘pragmatic centrists' or for that matter the ‘Left wing'. While on one hand, there seems to be a rising tide of netas claiming ‘shrinking space for freedom of ideas', on the other hands, very few would bring actual cases of abuse by the ‘Right wing' and the government's apathy to address the issues. Of course we will have such Anti-right wing champions raising tirades against village ‘chowdhry' as and when some incidents come up. Taking up issues for consumers even in industries dominated by large players like Telecom and Broadband; or say Airlines or Mutual Funds etc. via the Ombudsman for the sector was thwarted earlier and continues even now. The Left for sure has limited itself to labour related woes and that too in the organized sector alone which is quite curious, since Left leaning meant a concern for the larger masses as opposed to be friendly to large business interests, at least when the ideology originated, and that's how cheap rationshops etc. came into vogue. No wonder people lament about shrinking freedoms and a lack of credible alternative view.

Some news publishers and broadcasters in Commercial news media now has pick up the grouse of ‘Fake News' and that too in ‘other commercial media' and this is without directly pointing to names of other media. This after a while when most of these Commercial news media operators had only grouse against the ‘social media' for spread of ‘Fake news' and ‘rumours'. Now this is a good sign but at least there should be clear pointers around what ‘Fake news' is being spread. Also, there might be a host of ‘issues' which do not make it to ‘make it to main sections of news' due to journalistic apathy as well and these are not highlighted by any ‘news breaker'. These can be data based facts like too many consumer cases against a single company (may be other than Railways which is Public). Or a higher than normal cases against Banks or Insurance, abuse of Telecom or in DTH/Cable (although some cases do got highlighted in the later) so that public can take informed decision. Then of course there are environment related issues when Agri-lands get unscrupulously converted to ‘other uses' sans any defined policy for this off course, with hapless villagers left to fend for themselves. With the lawmakers focused on one-upmanship rather raising questions of public interests or bringing proposals so that it makes the stand of ruling dispensation clearly to public or issues of public interest, usually the ‘freedom of speech' tend to become a casualty, since then it is perceived to be self-serving rather than something with potential to rally publics. Now that may not be good, however tends to get ignored often leading to bigger issues. Let's see the ‘Game' evolve…                                          

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