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Mersal magnified Editor's Notes Remembering Indira Sivasailam... Medical costs hit the roof... Paytm karo... Excel Generators provide the vital back-up Don’t seem to feel the pulse… Things happen by accident and not by design... Plummeting profits of PSBs Welcome GST Make standards certification mandatory... Another Indian music maestro at the UN An inexplicable neglect Padma Bhushan for A Ramakrishna All eyes on Sankara Nethralaya The Jan Dhan bonanza Welcome thrust on trade in Modi’s foreign visits... He continues the focus on social amelioration For whom the MIDS bell tolls? Demise of a media baron... Wise Presidents The sea- saw battle continues... Not just in-laws (and outlaws); they’ve renowned academics at the helm! GNS - 100: our first subscriber Revving up the manufacturing sector When Ratan Tata visited SRM Welcome changes that testify to Jayalalithaa’s return to health Streamlining mandatory third party cover Fuel for thought B H Kothari - a tribute Gas is the way forward Liberal imports idling indigenous capacities GM Technology at last! Tribute – M V Murugappan When online building permits work…. Naidu’s return augurs well for Seemandhra Rs.1600 crore paper board plant of TNPL Auto components surge… TIAM turns a full cycle Editor's Says Infrastructure funding – lessons learnt Marketing expert Balagopal is no more How Air-India loses customs... Of course, Gujarat is vibrant Insurance companies bleeding, yet no decision on increasing FDI limit! The power-full Hindujas The Ports’ Pasha expands into Tamil Nadu Delhi Chalo... Vibrant Gujarat Recognition to role of NBFCs.... PPP mode for upgrading Corporation Hospitals S Ramanathan – a versatile musician, musicologist Like Hinduism: many paths to reach God... Revive development banks... Quality silica from Neyveli Diamond jubilee of Egmore Samskrt School A C Muthiah – his munificent bequeaths to science L&T- the specialty of special purpose vehicles Bihar – Nitish Kumar adopts the Lalu model Tribute – Manikam Ramaswami Muffled voices for merit… Boy, can you beat these? Parliament in paralysis... A think tank for Chennai More Shakthi to Das’ elbow A welcome initiative by the judiciary Building loyalty through the stomach CIPET hqrs to stay at Guindy – for the present? Welcome focus on core competence More tributes to GR The rise and fall of Annamalai University Fortune for Indian Airlines Preserving for the future CSR and CMI: promise of another Srinivasan Ramanujan... Land reclamation from sea appears cheaper! Inflation: are we emulating Argentina and Brazil? Adapt Vajpayee dinner diplomacy A glass full of corruption Strengthen the base... Readers' Mail For whom the bell tolls? A proud Madrasi Intellectual of rare qualities Modi and the lady TGS- The king storyteller Where a state respects its litterateurs… When the President was rendered homeless… A Grand Finale for SN’s MS centenary at the US… The few handicaps... Why this malaise in medical education? The ‘Jayanthi Tax.’ Online not in line with brick and mortar businesses... Shale gas and its shallow future Air Asia India will set new benchmarks for budget travel PC’s preference for professionals Tribute – UCAL Selvan… Maximising the micro pricing … Russi Mody – a tribute Fortune 500 review Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated Where is Rajaji? SoA @ 80 Banning booze... Towards speedy justice New IT products of Ramco in the pipeline… Bihar elections - the Rajaji formula worked Align crops to agro climate endowments… Pharma – overdose of copying No Maha Koottani in TN... Roaring Ro-Ro facility Poor quality of university VCs Nuclear power at the nucleus Tatas moving out of urea production... The brown list of Venkitaramanan Naidu will soon build a new Hyderabad Rahman at CIC West Bengal: mindless malignancy When TN politicians can emulate Kerala's Sweet news for TN sugar mills More heat than light Making ‘my Amaravati’... China invests in India He saved millions from starvation... EVM is tamper-proof Measuring roof tops in terms of KW/MW L&T: focus on infrastructure and more infrastructure… Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai There was flood of milk. Reason: no milk commissioner! Road development slows down The Gulf aviation boom Dr C Rangarajan returns to Chennai Reliance’s TV – 18 ready to launch Tamil News Channel Silver Years of Madras Musings Noble nonagenarians... Shanti and Sadhana through Music …and of a popular trade leader R Sridhar steps down as CEO of Shriram Capital An enemy’s enemy is a friend Cement prices continue to rise… Mu Sigma – is no more Valli, they are more marginalised Which side are you, Montek? When nations steal growth from one another… TN-leverage strength of BHEL, NLC... Odisha: spectacular win by Naveen Patnaik Focus on quality of power - its only around 170-180V IAS invades NDDB... Robber barons everywhere No engine for this car Put expensive assets created to use... Alexa – Talking Wikipedia Return to king coal for urea... The Swadeshi Trump Why land prices zoom in TN? Kulandai was a giant Kudos to NDTV... The star of Spencers is no more Shaming of Tamils by Tamil farmers at Delhi WTO Meet: resolved to meet again Gay abandon in pricing Five star activism stalls development activity Music happens The rise and rise of KCP S V Raju – a ‘good’ true liberal Should we change the official year? The ‘Ayyo-yes’ is no more Fall in crude prices help in oil sector reform Delhi is distant… Solar, solar everywhere … Lalu’s envy, India’s pride A more liberated TN… TN – agglomerate land holdings without alienating ownership Tatas moving out of urea production... Engineering seats go abegging This scant respect for Law CRS, a jewel among managers, is no more. Waning interest in public discussions… Tribute Multi-faceted Venkat Adharma of opposition politics Polls and promises Computation of GDP – conundrums continue Wanted: a second airport for Chennai Cutting the nose to spite the face Colour-Chem’s colourful KRVS Kinetic Karnataka London, London Narayan Tax agriculture Secularism and anti-Hinduism Protest masters... Quality education through the PPP mode Moily’s bold thrust The why of tax incentives A yen for wastage… ONGC at KG Basin Tihar, Puzhal not different from Parappana Agrahara Come elections, come advertisements... More Shakti to resource mobilisation... Godspeed, Chief Minister JJ Convulsions in The Hindu Poor representation for Kerala and TN in Cabinet A rich pool of talent not utilised…. The nuclear option TN accounts for the largest recruits by the IT sector CII projects higher growth… Eternal support for capitalisation of PS banks Scientists urged to take up farmer-oriented research Increasing non co-operation of state leaders Sweeter prospects for sugar A friendly business group Telangana in top gear… Cleaning Ganga – relocate tanneries and install electric crematoria Limit foreign borrowings to hi-tech, export potential projects... Shipping woes of Chennai companies to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines Tough task taking states together TELANGANA at last…BUT Build close rapport with business leaders Sri Lanka votes for change MHC should not return to its old indisciplined ways An informal presentation - analytical, forward locking... Funding the un-funded IPL - no surprise this scam EEC at the National Media Centre A Grand Finale for SN’s MS centenary at the US… Modi storms Silicon Valley Airlines in India: cost and space Whistle-Stop Tour of Raghuram Rajan Breaththrough in malaria control F C Kohli - his concerns all embracing IPL type auction for VCs? Solar thermal shines… The balancing act Contrarian cousins No mega rail project for Tamil Nadu Discoms deserve better… Small units prefers to remain small... Permanent secretariat for TN GIM A professional at the helm of IRDA... Haul over the coal Delhi is distant Lesson from Chandrababu Naidu When small is no larger beautiful.. Delhi returns to BJP
 
Revive development banks...

The first three decades of industrial development were marked by provision of finance on facile terms. Specialised development banks like ICICI, IDBI, IFCI and state financial institutions lent capital and term loans on attractive terms. The Madras Industrial Investment Corporation (that later became TIIC), set up in 1949, pioneered such industrial development finance both for equity and loans. These institutions have been extremely effective in attracting hordes of new class of entrepreneurs with modest resources of their own. I cite the instance of the evolution of the Padi complex where the famous house of TVS embarked on manufacturing. In 1962, the first of such units, Wheels India Ltd, was inaugurated. This was quickly followed by Sundaram Clayton, Brakes India, Lucas TVS... The funding was simple: for Wheels India, the total initial cost was Rs 200 lakh; around Rs 25 lakh each was contributed as equity by TVS and the collaborator Dunlop of UK. The balance was sourced as a term loan from a development bank.

    Similar was the funding for the other units at Padi that commenced production in quick succession. Dozens of units of Amalgamations, the Rane Group and several companies in the sectors of automobile, textiles, cement and sugar were set up with modest capital outlays with a portion contributed by the promoters and the balance funded through equity/term loans from development banks and SFCs. Until George Fernandes as Industry Minister in the Janata government  mandated public participation for a portion of equity capital, there wasn’t the need felt by promoters to go to the public for capital. In fact, the modest capital base of most southern companies didn't really need public funding. The promoters, for most part, were reluctant to go public.

Development banks, thus did a yeomen service in nurturing entrepreneurship. Hundreds of companies owe their existence to the funding extended by such banks. The latter developed a great deal of expertise in raising resources and in lending these over the medium and long terms. Of course, not all the portfolios ended profitable and there were bad debts and non-performing assets. But on the balance, these did yeomen service for industrial development.

In the 1990s with the opening up of the economy these institutions underwent a massive change. There arose vastly expanded scope for raising deposits from the public. This resulted in the development banks opting to become commercial banks. In the enthusiasm and attraction to grow as large commercial banks, these have lost their earlier thrust for development financing. There is also the mismatch between raising deposits over short term and lending for infrastructure and industry over long term. The resulting huge ballooning of non-performing assets is a cause for serious concern. (see article by S A Raghu page 36)

I feel there is need to return to the old days: of setting up development banks for industry. Specialised infrastructure development financing agencies on the one hand and the MUDRA Bank on the other are welcome initiatives. There is need for such specialised institutions to lend for equity and term loans escpecially for hundreds of mid-sized enterprises on modest  interest rates.


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