Letters

Letters to the editor dated June 9, 2020

| Updated on June 09, 2020 Published on June 09, 2020

Economic recovery

This refers to ‘Focus on small spends to revive economy’ ( June 9). While the economy has been encountering a slowdown since 2018, the Covid-19 broke out and ravaged the economy of the country. Since then, the Reserve Bank of India has reduced the monetary policy rate considerably, and financial intermediaries over a period of time reduced their lending rates to spur the growth of credit. However, the loan books of banks continued to show dismal expansion, especially in the case of the core sectors. The sluggish demand for credit and banks’ aversion to financing risks have adversely affected the growth of capital formation. In order to combat the terrible fallout and to save the economy from the ongoing recession, the government pronounced the mega stimulus package and the banking regulator executed many monetary policy measures to ensure surplus liquidity to enable the banking sector.

The lockdown has been lifted with restraints to prevent the spread of Covid-19. Human capital, which is one of the key inputs of production, needs protection from the virus and therefore the government should not skimp in spending to strengthen the public healthcare. The creation of demand for credit is critical, and it will emerge from business confidence. The purchasing power of the consumers, which is crucial to push demand, is dependent on the disposable income of consumers, and as such an increased flow of income into the hands of the consumers is vital to accelerate the demand for goods. It will pave the way for the demand for capital to invest in restarting the dormant economic activities.

Mere stimulus packages, a drastic cut in the monetary policy rates and inducing the banking sector to fund investment are not sufficient enough to the survival and revival of the economy. A holistic strategy, including the ways and means to accelerate demand for capital and for goods and services, is paramount.

VSK Pillai

Kottayam

Role change

Apropos ‘Managing an independent director’s career’ (June 9). The suggestion to have a cooling off time of three years for appointing an independent director as whole-time director has its pros and cons. While it would ensure that the ID continue to be objective, it will rob the company of benefiting from immediate use of extraordinary talent, the very rationale for such a role change.

Instead, the conditions for the shift may be made more role-specific, and the explanatory memorandum justifying the appointment may include a statement that the performance of the ID was above board and objective throughout.

YG Chouksey

Pune

Collaborative efforts

This refers to ‘How should start-ups play the game in a post-Covid world?’ (June 9). Really, the woes of the engines of economic growth remain untold. Though, it is incumbent on the start-ups to search for opportunities in the crisis situation and diversify their activities to be profitable. While it is the primary responsibility of these hapless entities to gauge for low-hanging fruits, much depends on the ability of the Angel investors, banks and other funding institutions of start-ups, who have relatively superior knowledge in connecting these entities to other healthy clients. This would not only facilitate mutual exchange of product information across the table, but also demonstrate provision for supply of raw materials on credit, purchase/sale of end products and ensure start-up sustainability as well as reduction in the default and NPA rate for funding agencies.

Sitaram Popuri

Bengaluru

Testing time

The Telangana government’s move to promote the class 10 students without examination is certainly welcome in view of the rising Covid-19 cases in India. The decision taken by the government to declare grades based on internal evaluation comes as a relief to both students and parents.

The figures of the coronavirus are still with increasing tendency. At this juncture it is wise to keep the young children away from the situations where there is possibility of cluster-formation.

Ravi Teja Kathuripalli

Hyderabad

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Published on June 09, 2020
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