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