Selected Published Articles of Ammannaya

1Credit and Growth Strategy-published in Financial Express dated 16th June 1989[This was on the basis of deliberations in bank economists conference held in Mumbai in 1989in which the author represented Syndicate Bank]

2NPA Management Strategy for Banks-Fortune India June1,1995.

3An Approach to Manpower Development in Banking Industry-Indian Banking today and tomorrow September1998

4Performance of Regional Rural Banks-Fortune India,31st January 1995.

5 Utility of Think Tank concept in Bank Management-Indian Banking today and tomorrowJuly 1982

6Is MOUs a Panacea for banks,Ills-Fortune IndiaFortune India Decemer1,1993

7Banking on Human ValueFortune India,16-28 February 1993

8.Strategic Planning in Banks-Fortune IndiaOctober16-31,1993

9Mult-Agency Approach to Lending-Indian Banking today and Tomorrow,October1989

10Credit Management Strategy-Fortune INdia,16-31August,1994

11.Customer Service In Banks-Fortune India-December 31,1995

12.A New Strategy For IRDP-Southern Economist ,1st January,1996.13Implementation of Performance Budget-Indian Banking today and tomorrowApril,1977

14.Banking on Change-Bhavan's Journal ,30th September2001.

15.Economy-Gandhian Way is the only Way-Bhavan's Journal,5th May2002

16.Banking Reforms and new Challenges for Banks-Southern Economist,15th July1997

17.26years of Bank Nationalisation-An Overview,Southern Economist15th July1995.

18 .New Growth Strategy and Alleviation of Poverty-NIF Weekly,18th July1982.

19.Banker,A Professional,Fortune India,1st January,1991.

20.Assessment of Working of Banks[cover feature]Eastern Economist13th July 1979.21.Overhauling Management Education-Southern Economist15th November1998.

22Attack on Poverty-Need for a New Growth Strategy,Southern Economist 1st May1997.

23.Pursuit of Core Competencies-Morning News21st February,1999.24.Performance Evaluation of Banks in Post Reform Period-Morning News31st March and 1st April1997 in two parts.

24.Gandhian Industrial Policy for Today's India,Rural India,February1970.

25.Management Education,Morning NewsMarch 1997.

26.Banking Experiments in Udupi and Dakshin a Kannada Districts,Morning News,5th April1998.

27.Role of Performance Budgeting in Banks,Eastern Economist23rd November1979.

28Banks and Rural Development-Financial Express21st NOvember 1978.

29Credit Policy and Banks-Eastern Economist annual number20th November1982.

30.Man Management In banks,Eastern Economist ,20th November1981.

31Employee Participation in Developmental Functions in Banks-Journal of Banking and Foreign ExchangeAugust and September1977.

32.Employee Productivity in Banks,Financial Express25th Sept,1979.

33.Banking Accomplishments and Prospects-Eastern Economist annual numberNov1981.

34.Working of Public sector undertakings in India-Finance and CommerceJuly,1970.

35.Utility of Chit Funds-Southern Economist 15th September1969.

36.Profitability and Productivity in Banks-Eastern Economist9th April1987.

37.Spotlight on Non-Banking Services,Giant,October1977.

38.Service Area Approach-A new Challenge for Banks,Pigmy Economic ReviewNov1990.

39Handling People In Banks,Banker,July1982.

40.Employee Productivity in Banks-Financial Express27th Sept1979.

41,Credit Planning,Financial Express 29th Dec1975.

42.Lead Bank Scheme -Its Operational Problems,Financial Express25th August1973.

43.Performance Budgeting and Empolyee Appraisal,Financial Express10th July1979.

44.Man Management In Banks,Financial Express ,3rd April1982.

45.Lead Bank Scheme and Branch expansion,Financial Express15th January,1977.

46.Banks and Rural Development Financial Express 20th Nov1978.

47.Bank Nationalisation and After,Financial Express 4th July1975.

48 Economic Growth and the Elderly,Economic Times7th May 1982.

49LAB-Morning News23rd January1997.

50.UDUPI DISTRICT-A Pressing Necessity,Morning News 14th January 1997.

51.Strategy for the Development of Uttara Kannada District-CanaraTimes23rd January1997..

51Staff Motivvation in Banks,Canara Times9th December 1996.

52.Performing Leadership-Canara Times15th December1996.

53.Individual DevelopmentHow to Get Rid Of a Bad Mood-Canara Times 5th January1997.52.Taxation of Casual and Non-Recurring Income,Eastern Economist23rd February1973.

54Banking Business In Dakshina Kannada District Canara Times.

55.Development of Uttara Kannad District Its Banking Aspects.Canara Times21st December1996.


56.RRBs And Economic Development,Economic Times.


57Towards Better Performance Budgeting,Financial Express28th October1979.


58.Population Contro-A Factor in ProductivityImprovementSouthern Economist15th August1982.


59.Emerging Banking Challenges-Fortune India, March 1-15,1995.


60.Regional Rural Banks On The Horns Of A Dilemma,Fortune India16-31July 1993.


61.Importance of Marketing for Good Bnaking,Financial Express22nd July 1973.


62.Business Develpment by Bnaks In New AreasFinancial express 30th March 1974.


63.Bnaking of tomorrow needs complete professionalisation.


64.Corporate Planning,Mangalorean25th NOV1982and 25th Dec 1982.


65.Credit Planning at Block Level Financial Express.
66.Bank Credit as an input In Development-Some Issues.
67.Reverse Mortgage Loan-a Novely in India,Southern Economist 15th February2007.
68.GDP Growth in Indian Economy-Need for Further Refgorms,Sothern Economist1st March 2007.
69.Public Debate On Corruption -Deccan Hearld10th March 2007
70Can SEZs Be Drivers Of Future Growth of Indian Economy,Southern Economist,1st July 2007.
71.Inflation -A New Headache-Southern EconomistApril1-15,2007..
72Funding Infrastructure,Business line11th November2007.
73Indian Banking-2010-IBA BULLETIN[Indain Banker],Special Issue january2004.
74.Implementation of New Basel Norms and Banking opportunities-Southern Economist 1stFebruary2007.
75.Fianancial Inclusion-Tasks and Strategies,Southern EconomistJanuary1,2007.

75.New Basel Norms and Banking opportunities-Sothern Economist 1st Feb2007.
76.Stronger Rupee,Business Line16thJuly2007.
77.Extending Employment Programme,Business Line3rd March 2008.
78.Real Inclusion ,Business Line 25th May 2007.
79.Grass roots Banking,Business Line12th June2007.
80.Fresh Initiatives,Bl 12th March 2008.
81.Funding Infrastructure,Business Line12th Nov 2007.
82.Public Debate On Corruption,Deccan Herald 10th March 2007.
83.Power to unlock,Bl20th Sept2007.
84.Farm Reforms,Business Line23rd July2007.
85.Rural Banking ,Hindu.31st March 2008.
86.Overview Of Banking Development-A Book Review,Southern EconomistDec1,2007.
87.Reverse Mortgage Loan -A Novelty in India,Southern Economist15th Jan2007.
88.Fighting Corruption,BL 23rd Feb2007.
89.Bank Mergers,Business Line 3rd Jan 2008.
90.Take Up All Pending Reforms Business Line 26th Feb 2008.
91.Demographic Dividend Business Line 31st March 2007.
92,SEZ Policy,Bl3rd April 2007.
93.Moving Forward With Forex,Bl30th April 2007.
94.Tackling Inflation Bl7th April 2007.
95.Remunerative Prices,Bl22nd March 2007.
96.BSNL-MTNL Merger,business line27th March 2007.
97.Good And Sensible Budget2008-09,Southern Economist,March 15,2008.
98.Economic Development-Its Banking Aspects-Finace and commerce,October,1972.
99.Performance Budgeting By Bnaks-Financial Express24th October1973.
100.Central Budget2007-08-AView,Southern economist15th March 2007.
101.Inflation-A New Headache-Southern EconomistApril1-15,2007.
102.Banks and Economic Planning,Financail ExpressAug 21,1974.
103.Credit Management,Fortune India,16-31,1994.
104.New Basel Norms and Banking opportunities,Southern EconomistFeb1,2007.
105.Banking Aspect of Twenty Point Programme-Some Suggestions,Southern EconomistJuly1,1980.
106.Market Research and Marketing Technique in Banking Industry,Finance and CommerceJuly,1971.

.

Articles and publications of Dr.K.K.Ammannaya

Dr.K.K.Ammannaya,first Ph.d in banking from Mangalore university,started writing articles as a9th standard boy and his first english article appeared in Teenager.His first kannada article appeared in Rashtramatha kannada weekly then being edited by Kadengodlu Shanker Bhat at Mangalore.He has so far published 2006 kannada articles during last 45 years in papers like Prajavani,kannada PrabhaAshavadi,Vartha Bharathi,Dhyeya Nishta Patrakartha,Uthan,Udayavani,Vijaya Karnataka,Udyamaddarshi,Taranga,Ulume,Bhavyavani,kannadajanantharanga,Hosadigantha,Janavahini,Anantha Prakash,Hosathu,yuga Purush etc.In english he has published 1105 articles during last 45 years.His articles have appeared in Financial Express,Southern Economist,Eastern Economist,Banker,Facts for You.Fortune India,Indian banking today and tomorrow,morning news,economic review,Pigmy economic review,Giant,challenge,IBA Bulletin[now called Indian Banker]etc.He has published four books apart from editing three books.He has been a prolific writer and thinker.
As chairman of Varada Grameena Bank he achieved its magnificent turnaround .He wiped out accumulated losses and achieved net profit of big ammount for the bank.He also constructed own Head Office building for that bank.His work and achievements were commended by RBI and NABARD>BIRD Lucknow has prepared a case study about his banking experiments and achievements.He was guest faculty for some management institutes and he was also guest faculty in the staff training college of Syndicate Bank.He was an executive in senior management grade in Syndicate Bank.He had worked in several senior positions in that bank.He had served as chairman of a Regional Bank for five yearsand achieved its magnificent turnaround.He wiped out the accumulated losses of the bank and achieved large net profit apart from constructing own Head Office building for the Bank.BIRD,Lucknow has made a case study of his banking experiments and acievements.Tharanga,Kannada weekly has published a cover feature regarding his banking experiments and accomplishments in its issue dated 31st December 1995.

Overview of Banking Development1947-2007

Commecial banking all over the worldhas undergone lot of changes during the last six decades.In the case of Indian banking too there have been innumerable changesduring this period.In some regards the changes that have taken olace in Indian banking have been far more significant and much more radical than elsewhere in the world.Significant changes and developments in post reform stage have totalally transformed Indian banking sector.

With improved risk management practices and altered approach to overall management and governance repositioned competitive strategies,improved IT infrastructureand sharper customer focus and enhanced customer-orientation commercial banks in India have been able to operate profitably within a narrower spread and achieve excellent financial results.

There has been considerable improvement in asset qualitywith NPAs of SCBswhich stood at 15.7 percent of gross advances and 7percent of total assets in 1995-96 declining to 3.3 percent of gross advances and 1.9 percent of total assets in 2005-2006.

The improvement in terms of decline in net NPA rate has been much more impressive.This trend is expected to continue with gross NPAs and net NPAs further declining in the years to come.There has been distinctly discernible improvement in performance on almost on all fronts.Indian banks are at present relatively much stronger and sounder vis-a-vis their Asian counterparts in terms of resilience,range of products,and services,quality of assets and productivity and profitability and overall balance-sheet strength.

Indian banking has attained this position through a process of development in six stages and Sri D.T.Pai former chairman of Syndicate Bankhas brought the significant banking developments and changes in these six decades in his own inimitable style in the book titled''Overview of Banking Developmet-1947-2007''

The book is divided in to two parts.-Part I and Part-IIand both the parts consist of four chapters each.While the chapters in Part-I deal with banking developments in pre-reform stage the focus of Part-II is on post reform banking developments.Dwelling on banking history in pre-independence era in Chapter I the author has indicated how the period saw the birth s of series of banks and series of deaths of banks too.This period also saw the birth of RBI,the central banking authority .

The period from 1947 to 1968 forms the subject matter of Chapter II.the period saw the enactment of Banking Regulation Act 1949giving powers to RBI to regulate,supervise and develop banking system on sound lines.In fact the decades of 1950s and 1960s provided real fondation for Indian banking system.Mr.Pai has explained how this period saw the development of necessary legislative framework for facilitating reorganisation of the banking system .Transformation of Imperial Bank in to SBI and redefinition of its role in Indain economy took place in this stage.The measure of social control over banks initiated in December 1967 ,establishment of National Credit Council,in 1967 setting up of term lending institutions,such as IFC in 1948,ICICI in 1955,IDBI,National Industrial Development Corporation,National Small Scale Industries Development Corporation etc are dealt with in this Chapter.The third chapter is devoted to the banking developments in the period from 1969to 1979.This was the period of rapid expansion.Fourteen major banks were nationalised 0n 19th July 1969.Lead bank schemr was conceived formulated and adopted for implementation in this stage.This period also saw formulation of innovative schemes of deposits and and credit including credit schemes for rural development,launching of scheme of lending under differential interst scheme,composite loan scheme,launching of 20 point programme,establishment of RRBs,in terms of Regional Rural Banks Act 1976 etc.The author has also explained how massive branch expansion took place in the period from 1969 to 1979.

The following supportive data with the help of which readers can gain full insight in to the changesand developments .Number of bank branches were 8262 in 1969and number of branches incresed to 30202 by 1979.The percentage of rural branches incresed from 22.4 percent to 44.1 percent in this period.and this is a significant development.

Population per branch declined from 65000 to 20000 in this period.Sri pai has also indicated that there was steady increse in the flow of credit to priority sectors as their share incresed from 14.6 percent in June 1969 to 30.6 percent in 1979.

The fourth chapter dilates on banking developments in 1980s.Nationalisation of six more banks,on 15th April 1980,revision of priority sector lending targetupward from 33to 40 percent implementation of IRDP scheme,setting up of NABARD,in 1982,establishment of DICs,annoncement branch expansion policy,adoption of new parameters for evaluation of performance of banks,Steps taken for rehabilitation of sick units ,introduction of health code system,to evaluate the quality of credit portfolio,steps taken for improvement of profitabilty,efforts at consolidation and diversification etc form the subject matter of this chapter.Withdrawal of credit authorisation scheme and launching of Service Arae approach with effect from 1st April 1989,establishment of SIDBIin 1990,implementation of debt relief scheme in1989,introduction of computerisation as per the recommendationof Rangarajan Committee,establishment of Discount and Finance House of India,,stock holding corporation of India,and SEBIare also covered in this chapter.

Chapter V deals with first phase of banking reforms.In this chapter Sri Pai has beautifully brought out the rationale of reforms in financial sector and recommendations of Narasimham committee which formed the blue-print for reforms.This chapter dilates on reform measures implemented for easing of external constraintsand factors affecting profitability of banks,such as administered interest rates,high level of pre-emption in the form of CRR and SLR,introduction of prudentio-al norms,relating to capital adequacy,income recognition,asset classification and provisioning,creation of competitive environment,institutional strengthening,,revision of format of Balance Sheetto bring about transparency,setting up of debt recovery tribunals,and enactment of SARFAESI ACT,provision of access to captal market for banks,micro finance schemr 1992,introduction of PLR,measures for improving credit delvery system,freedom for banks to rationalise branch network,new bank licensing policy,establishment of board for financial supervision in RBI,integration of financial markets in India,establishment of national stock exchange,national securities clearing corporation,Nationnal Securities Depository ltd,Basel Core principlesrelating to banking supervision,etc.Sri Pai has very competently anlysed and evaluated the impact of banking banking reforms in this chapter.

Chapter VI deals with banking reforms -phase IIimplemented in INdia based on second report of Narasimham committee submitted in April 1998.This chapter covers recommendations implemented in phases such as enhancement of capital adequacy ratioto 9 percentfrom earlier8percent,general provision of 1percent in respect of standard assets,introduction of ALM system,introduction of loan review mechanism,establishment of asset reconstruction company,to address the problem of hard core NPAsclassified as doubtful or loss assets.adoption of risk management system,dismantling of BSRBsimplementation of VRS,upgradation of technology,consolidation and convegence of banks and financial institutionsetc.

The author has logically classified reforms as competition enhancing measures,market force roleenhancing measures,,prudential measures,supervisory measures,and technology related measures.He has highlighted banking developments in the second phase of reforms since 1998 andhas listed emegence of universal banking,revolution of information technology,more effective payment and esttlement system,introduction of risk based supervision.,new basel accord2001,megers and amalgamations,corporate governance ,financial inclusion,bank licensing policy,CBS,RTGS,new banks and LABs,offshore banking,units,fair practice code,anti-money laudering,and KYCsetting up of banking codes and standards,board of India,credit rating agencies etcas significant developments during this period.In this chapter the author has thrown adequate light on risk management new basel accord IIand its implications,bith of new generation banks,and merger of 18 banks and financial institutionsthat took place during the period from 1995-96 to 2006-07.He has also discussed amalgamation RRBs nad establishment of LABs in private sector in this chapter.
C HAPTER VII attempts an evaluation of Indian banking sector on the basis of global benchmarks under different parameters such as capital adequacy ratio,return on assets,NIM,cost-income ratio,NPA rate,capital asset ratio,fund volatility ratio, etc.The author has based on his analysis of supportive dataconcluded that Indian banking system has emerged stronger,sounder,and more resilient and compares well with global rangeunder all vital parameters.Pursuit of global benchmarks without being oblivious of local realities is very vital and crucial for Indian banking industry today and also in the days to come.
Chapter VIII has attempted a comparison between public sector banks and private sector banks in such areas as branch network,in rural and semi-urban areas,and also in metro cities,market share of business,in deposits,advances,investments,,advances to priority sectors,financial performance,capital and asset quality,ratio of operating profits and net profit to total assets,use of technology etc.
The vast banking exposure and experience that the author has must have stood him in good stead in analysing the changes,and developmentsin different stages and arriving at the conclusions.This publication is a welcome addition to existing stock of literature on banking history.The book which is extremely rich in statistics and historical data incisively explores and examines various facets of banking developmentin the period from 1947 to 2007and provides focussed view of significant changes alongside the analysis and evaluation of their implications.
The book penned by Sri D.T.Pai eminent banker in his own inimitable style and in a lucid language is exclusively devoted to the narration and discussion of banking development in India in post independence eraand hence the title could have been more specific to epitomise the contents with exactitude.
To put the whole thing in a nutshell Sr Pai has competently undertaken a comprehensive peep in to the past six decades of Indian banking and has logically analysed developments and ,changes,and policy shifts apart from evaluating the impact thereof with useful supportive data. The book will surely prove useful to banking students,teachers of banking,researchers,and banking professionals.
Sri K.K.Pai veteran banker of All India stature and presently Registrarof Academy of General Education,who has written foreword has commended the effort of D.T.Pai in writing this useful book.That sri Pai has dedicated the book to to his mother is but the reflection of hos love towards his mother.Insertion of one more chapter by way of attempting of a look into the future in order to identify the emerging issues,concernsand challenges and the manner in which they can be addressed would have further enhanced the utility of the book.
[This is a book review published in Southern Economist,fotnightly financial journalin the issue dated 1st December 2007.

INDIAN BANKING : NON-ISSUES

This has reference to the IBA-union talks regarding certain demands. While pension is an issue that has to be addressed all other issues are non-issuesand bank unions must not lose sight of their main objective by taking up non-issues.In january 1996 when there was a dead line for giving pension option there was no clarity regarding pensionand in the absence of required data and policy clarity thousands of bank officers and staff did not file pension -option.Clarity as regards pension emerged only after implementation.Now that such clarity is available all bank staff can take informed decisionand hence one more option must be provided.Altrnatively as in LIC of India all bank staff must be made eligible for pension alone.Meger of banks as rightly stated in the article is not an issue at all.Elimination of duplications,and achievement of larger volumes and economies of scale all these are timetested principles of economicsand adherence to such sound principlesmust be advocated by all including unions.For example SBI associate banks have their own head offices,regional offices etc.By merger these offices and their cost including expenses such as rent,electricity,teleplhone etc can be saved.The organisational framework of SBI itself can take care of administrative infrastrucure requiredby associate banks on merger.The savingby way of elimination of duplication will be substatntial.Economies of scale will ,enhanced brand image,global size etc will enable SBI on meger of associatesto increse its business volume,profits and financial muscle.With this the paying capacity of the bank will go up and staff can get incresed emoluments and amenities.The unions have to aim at that scenario instaed of opposing merger in the larger interests of entire staff in banking industry and Indian economy.Outsourcing of work which can be got done at lesser cost outside must be encouraged to increase profitabilty.It is surprising that unions are opposing this too.Comassionate employment is against sond economics.Employment must be on the basis of talents and merit.We need high productivityin banking industry.During these days of acute competition public sector banks can not afford to keep ill-equipped staff on their rolls and if they continue to do so they will lose further market share of business on account of aggressivenes of private bank staff and they will become more vulnerable to comprtitive onslaughts of private banks.As a result the capacity to pay will also decline .In that scenario bank unions may have to plead for salary reduction for staff.It is therefore better for unions to focus on issuesi.e pension for all including those who left banks on account of resignation,retirement,death or VRSafter last option date.This will be in their own interest and also in the interests of posterity.

UNION BUDGET 2008-09

Three things that are conspicuous and stand out prominently in the Union Budget – 2008-09 presented by Sri P Chidambaram, Honourable Finance Minister are:-

1. a big stimuli to agricultural renewal along with substantial relief to farmers from indebtedness;
2. an enormous push to social sectors, particularly education and healthcare; and
3. substantial bonanza to the salary earning category of individuals, women and senior citizens. By and large, the budget is good and sensible with several positives to its credit.

FISCAL DISCIPLINE:

The budget has given adequate attention to fiscal consolidation and fiscal deficit and revenue deficit are sought to be restricted to reasonable levels. The micro economic figures reported and projected in the budget in terms of fiscal and revenue deficits indicate strict adherence to fiscal discipline. The fiscal deficit in 2007-08 is 3.1 per cent against the estimate of 3.3 per cent and revenue deficit is 1.4 per cent when compared to the target of 1.5 per cent. During 2008-09, the revenue deficit will be 1 per cent of GDP while the fiscal deficit has been pegged at 2.5 per cent of the GDP. It is heartening to note that the government has been able to achieve a higher Tax-GDP ratio. Tax GDP ratio has gone up to 12.5 per cent in 2007 when compared to 9.6 per cent in 2003-04. Tax GDP ratio is likely to go up to over 13 per cent in 2008-09.

PRIMACY TO AGRICULTURE:

The budget has accorded primacy to agriculture with larger allocation of resources and with higher investment in irrigation. Stepping up of gross capital formation to 16 per cent by the end of the Eleventh Plan period will go a long way in creating and expanding capabilities in the agricultural sector and in accelerating the growth process in the sector. It is budgeted to increase total agricultural loans to Rs.2.8 Lakh Crores in 2008-09.

The massive farm loan waiver scheme contained in the budget provides for waiver of loans amounting to Rs.60,000 Crores which will benefit 40 million farmers. Under the scheme, there will be complete waiver of all loans overdue on 31.12.2007 and remained unpaid until 29^th February 2008 in respect of three crore small and marginal farmers. The scheme also covers one time settlement scheme (OTS) for other farmers for all loans that were overdue as on 31^st December 2007 which remained unpaid as on 29^th February 2008. Under this scheme, rebate of 25 per cent will be provided against payment of 75 per cent of the dues. The implementation of debt-relief scheme will be completed by 30^th June 2008.

Having regard to the economic growth taking place under this globalising regime any relief to the marginalised sections including small and marginal farmers is welcome. As pointed out by the Prime Minister – Dr Manmohan Singh “considering the amount of depression that prevails in the agriculture sector this response mechanism (farm loan waiver ) is fully justified”. The scheme will help end the growing farming distress and desperation of farmers who are neck-deep in debt. Dr M S Swaminathan noted agricultural scientist has also commended the support given to farm sector and mentioned that the “budget is likely to stimulate agricultural renewal and mark the beginning of the end of the era of farmer suicides”. While as a matter of principle there may be a strong case for providing relief to farmers in distress a bail-out scheme of this magnitude may in the ultimate analysis affect the state exchequer and the banking sector. Banks are bracing up themselves to fulfil the Basel II norms and at this juncture such a scheme may tell upon their health. Under the scheme all those who have paid the instalments and interest will not get any benefit. Only those farmers who have defaulted will get the benefit of waiver. The scheme will serve as an incentive for non-payment and will have a demoralising effect on regular borrowers and in the days to come give rise to a culture of further and recurring defaults. The adverse impact of the scheme on repayment culture in rural areas will be there for a long time to come. All the same, the scheme will go a long way in spurring the farmers to greater efforts at producing larger quantities of food and such one time spur is a pressing need at this stage for India’s food security.

Radhakrishnan Committee has estimated the indebtedness of farmers at Rs.130000 Crores. The cost involved in the scheme is Rs.60,000 Crores which is not a budgetary outlay. But, it has been clarified that the government will reimburse equivalent amount to the banks. Hence, this will help banks in strengthening their balance sheets. Whatever the impact of the scheme on government finances, on banking system or on the repayment culture in rural areas, the Finance Minister has done his best for the farming community.

SPUR TO INDUSTRIES:

Reduction in excise duty on small cars and two wheelers to 12 per cent from 16 per cent reduction in excise duty on buses and chassis from 16 to 12 per cent cut in excise duty on pharmaceutical products to 8 per cent reduction in Cenvat from 16 to 14 per cent and shift to specific duties for unbranded petrol and diesel from advalorem rates will help the concerned industries and result in higher industrial growth. Corporate sector has not been a direct beneficiary from the budget. Corporate tax rates and surcharge remain unchanged. But, there are indirect benefits in the form of across the board reduction in Cenvat from 16 to 14 per cent, increase in income-tax exemption limit for individuals, etc which will help spur demand and promote sales on account of availability of extra money in the hands of tax payer as a result of lesser tax. Also, Indian industry will continue to enjoy the same level of protection against competitive imports with unchanged peak customs duty at 10 per cent. Corporate debt instruments stand exempt from tax deduction at source

ACCENT ON SOCIAL SECTORS:

The other significant aspect of the budget is larger allocation for education health and social sectors. The 20 per cent rise in outlay on education and 15 per cent on health care are welcome initiatives aimed at correcting the historic neglect of these crucial sectors. This will go a long way in building up human resources in terms of talent, health and productivity, so necessary for creating and expanding capabilities in the economy. As a result, India’s ranking in human development index (HDI) (now 128) may also go up. 54 per cent of our population is less than 25 years of age. By focusing on these crucial areas, we can reap huge demographic dividend.

The budget provides for Rs.16,000 Crores for National Rural Employment Guarantee Programme which will be extended to all 596 rural districts. Although the share of agriculture in GDP is just 18 per cent agriculture presently, bears the burden of 58.6 per cent of India’s population. In ther words, 58.6 per cent population depends on agriculture for livelihood. The implementation of the national employment guarantee programme in all 596 rural districts will help provide gainful employment to surplus manpower now available in agricultural sector. By far the most valuable possession of an individual is his body, his physical and mental labour. The national employment guarantee scheme, if implemented in all rural districts will provide larger opportunities for employment which will facilitate inclusive growth.

Shortage of skilled workers is found in several parts of the country. The proposal to upgrade industrial training institutes is a welcome initiative. The establishment of 16 new central universities, three more Indian Institutes of Technology and two Indian Institutes of Science Education and Research will go some way in meeting the growing demand for quality institutions of higher learning.

Considering the robust tax revenue, the Finance Minister could have considered allocation of larger funds to the infrastructure sector. No doubt he has increased allocation to various schemes such as, Bharat Nirman, NHAI etc. But, the focus and attention given to infrastructure sector is not adequate.

REFORM AGENDA IGNORED:

The Finance Minister has made an allusion to India growth story and average growth rate of 8.8 per cent achieved during the last 4 years. He could have given a fresh push to economic reforms in order to arrest and reverse the recent slow down in growth to 8.7 per cent. Business sentiment is at present very fickle and is vulnerable and the optimism that was obtaining in the past has vanished. Another dose of reforms was necessary at this stage.

The Finance Minister has made an llusion to the need for listing of all public sector enterprises in order to unlock value. But, he has not spelt out any specific action plan with a definite time frame in this regard. He is silent on policy reform options figuring in the economic survey. Unvieling of a programme for implementing pending reforms such as labour reforms, reduction of government equity in public sector enterprises, banking reforms, consolidation of banks, pension reforms, expenditure reforms, reform of state government finances, reform of urban transport system, power sector reforms, reform relating to FDI in retail sector, reform of state financial corporations, tax reform etc would have given a right signal to the economy and the market which would have in turn, enhanced business confidence and created all-round optimism so necessary to spur investments and growth.

The raising of exemption limit for income tax to Rs.1.50 Lakhs and to Rs.1.80 Lakhs in the case of women and to Rs.2.25 Lakhs in respect of senior citizens is a welcome step. This will please the middle class. It will also enhance consumer spending and promote demand for goods and services which will in turn, give a boost to industry.

MONITORING OF OUTCOMES:

The Finance Minister has announced that he will institute a monitoring mechanism to monitor and evaluate the outcomes and physical results accruing on account budgetary allocations and spendings stress on physical results and outcomes rather than on financial outlays is indeed a welcome step. For achieving physical results and outcome commensurate with allocations and spendings there should be stress on good governance with accountability for performance and results. The accent must be on deriving physical results equivalent to Rs.100 for every Rs.100 released and spent. There should be stress on achieving definite results according to a time bound programme. It is advisable to break and split the targets into quarterly targets and physical results must be evaluated with reference to such quarterly targets. Evaluation of results both quantitatively and qualitatively vis-à-vis the fund releases and spendings will go a long way in ensuring better governance and enforcing accountability for performance and results. To what extent the Finance Minister will be able to assess the outcomes will unfold itself in course of time. However, the allocation of Rs.10,000 Crores under Plan B to provide additional funding to states based on their performance in the implementation of specific schemes will serve as a strong incentive to achieve physical and qualitative targets. What we need is superior execution and super implementation. The government machinery at state level is not competent to ensure this and hence, it will be better to involve private sector in the process. Similarly, monitoring to be objective must be outsourced to outside private agencies. If it is entrusted to bureaucracy it is bound to become another source of misuse of power, corruption, favouritism etc. It is better to entrust the task of evaluation to outside professional organisations like KPMG, Price Water Coopers, or Ernest and young or any other professional organisations.

The proposal to develop bond, currency and derivatives markets with necessary regulations and to arrange for seamless trading of securities with uniform rates of stamp duty across different states are significant initiatives in the direction of reform. Development of a full-fledged bond market will help increase the flow of capital to infrastructure projects.

In overall terms, the budget is well-crafted and appropriately designed with several positives built into it. The decision to put agriculture in the center stage will boost rural economy and improve demand. The huge bonanza budgeted to be provided stands balanced with smarter economics. If the budget proposals and schemes are carefully and meticulously implemented with accountability for physical results and outcomes commensurate with spendings at all levels the same will surely deliver the intended outcomes and take the economy along the path of high growth.