Debt vs equity

This refers to the article “In my page” by Amit Shankar (current, February 27) is timely given the current corporate environment. This article has well brought out the paradigm change towards debt driven vs equity driven business models.

This debt model has gained respectability since 1991 when the Indian economy was opened up. The US controlled multilateral organizations have played the role of global money lenders.

Gigantic debts by a few corporates have displaced the more democratic equity-based system. Even IPOs are exorbitantly priced with 40/50 P/E ratios aimed at listing gains.

So the common man has lost their foothold in the capital market ever since the ‘liberalization’. The business has morphed into day trading. The return to equity, IPOs priced at par, village cooperatives, licensed micro lenders at village level, investment recovery focused tax system are the need of the hour.

S Sambasivan


Pakistan-India dynamic

This is with reference to the article ‘Will Pakistan reach out to India’ (March 1). It is high time that Pakistan realizes the importance of peace on the border and cordial relations with India. India and Pakistan share the same culture, economic conditions, and strategic threats. Hence we should work in cooperation for the well-being of both nations.

One of the most important sectors that will benefit from cordial relations between the two countries is tourism, especially in Kashmir and Punjab. Secondly, peace in the region will also boost the export of products produced in these countries, boosting jobs.

Finally, with closer ties, we can keep the world’s superpowers at bay.

Veena Shenoy


Happy consumers

Apropos’ government hikes domestic LPG prices by ₹50 per cylinder; ATF prices slashed’ ( March 1), the latest hike in the prices of the domestic LPG must have come as a ‘bolt from the blue’ for the non-subsidized consumers.

In fact, they were long awaiting a ‘reduction’ given the fall in global oil prices. But sadly, that did not happen.

However, it may be pertinent to note the ‘timings’ of the government taking a ‘plunge’ soon after the elections to Manipur, Nagaland and Meghalaya state assemblies getting over, with nothing at ‘stake’, at least for now.

As is well known, every household is entitled to 12 cylinders of 14.2 kg each at subsidized rates in a year and beyond that, they need to make any additional purchases of LPG cylinders at the market price based on the retail prices decided by the state owned oil marketing companies (OMCs) at the beginning of every month.

So a kind of ‘Mini Budget’s presentation is keenly awaited by the hapless consumers on the very first day of each successive month.

Vinayak G

New Delhi

Credit blues

This refers to ‘Non-food bank credit grew at 16.7% in January led by services sector: RBI’ (March 1). Even though the banks have fared well in non-food credit growth the absorption of bank credit by the MSMEs is sluggish.

Despite the pivotal role of MSMEs in the economy by creating jobs and foreign exchange earnings, the elevated cost of capital is driving away private investors.

MSMEs are facing many challenges in marketing products and timely sales realisations, and their need for working capital is increasing.

It is therefore essential to reduce the bank lending rates to MSMEs or else the government must provide subsidies to them to compensate for the high interest rates. It will not only ease the interest burden of MSMEs but support the banks to augment credit growth. A win-win situation for MSMEs and banks.

VSK Pillai


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