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