VOL.

1 | ISSUE 4 SEPTEMBER 2019

MIND AUDIT An Initiative by T & D

'Corporate Debt Issues in India' 'IMF's Growth Forecasts'

'Private Carpooling to be No Profit No 'Masters of Business in

Loss' Asia'
 Corporate Debt Issues in India
A few months ago, when the Comptroller and
Auditor General of India (CAG) rapped the
Union Finance Ministry for its off-balance
sheet borrowings, the news did not come as a
surprise to anyone following the
government's finances. As several economists
have calculated, if one were to add up all the
extra budgetary liabilities of the Indian
government, the fiscal deficit would actually
be double what was being claimed in the
Budget speeches.
Even if just the official debt numbers were to
be counted, the debt-to-GDP ratio has been
creeping up. A bigger concern was that almost
a quarter of the Budget spends were going
into servicing the rising debt. More
importantly, fresh debt being taken by the
government was largely being spent on paying
the interest of its debt taken earlier. In
essence, not a nice place to be in. For a long
time, when the debt problems in India were
talked about by economists and business
analysts, it was largely in reference to
corporate debt. But as is slowly becoming
apparent, India has a debt problem at every
level - in Union and state government
finances, in the balance sheet of corporate
India, and even in household debt. The
indebtedness has been creeping up slowly,
and under the radar. But unless this appetite
for debt is curbed now, it could hit the already
slowing economic growth very badly.
Jaipuria Institute of Management, Jaipur
The government has had to keep spending
(and, therefore, borrowing more) to ensure
that the GDP growth does not stall. But that is
also one of the reasons for the corporate
sector's inability to access cheap debt.
Government borrowings are crowding out the
private sector, causing firms to raise money at
higher costs.Corporate India has not been able
to reduce its debt problem, despite the clean-
up initiated by the then Reserve Bank of India
(RBI) governor Raghuram Rajan. They mainly
got into trouble because of excessive
borrowings for projects that turned dud for a
variety of reasons - deteriorating economy,
policy changes, dishonest promoters and
global factors. Despite the concerted efforts
by the RBI and the government (Insolvency
and Bankruptcy Code), the problem has
worsened. A cursory look at the balance
sheets of top companies shows that in the
majority of the cases, debt is rising faster than
revenues and profits. And now, hidden debt
taken by promoters - or promoter level debt -
is roiling the financial sector.If that isn't bad
enough, recent statistics show a worrying
trend of household savings coming down
while household debt is going up. High
household savings were the cheapest source
of funds for banks; it allowed them to lend
freely and support corporate investment in
new projects. But this source is beginning to
falter. At the same time, cheap consumer
finance had been fueling the consumption
spree of Indian households. But now, as
growth slows, and in turn hits jobs and income
growth, the rising indebtedness could cause
problems. Consumption has already started
slowing as cheap consumer finance dries up,
and people get more cautious.In the following
stories, we look in detail at the problems of
debt being faced by the government, the
corporate sector and households.
MIND AUDIT | [ 1 ]
India' s growth figure
driving in the slow
lane
By: Saloni Jain
(PGSM1947)
The global financial crisis (GFC)
refers to the period of extreme
stress in global financial markets
and banking systems between mid
2007 and early 2009.The
International Monetary Fund
(IMF) and financial sector experts
continued to predict till October
2008 that the global economy
would grow rather than shrink.
Explaining the markdownIndia is
facing similar situation at present
the economic growth rate
(quarterly) has been sliding for the
last five quarters from 8% to 7%
to 6.6% to 5.8% and now to 5%. 
Source of problem
It is from the unorganised sector
which has been in decline since
demonetisation. It was further hit
by the Goods and Services Tax,
capacity to produce.The two How can India come out of slow
slowdown in manufacturing,
sources of investment are private down?
construction and steep decline in
and public. The Private More Government Expenditure
consumption rates the graver
investment source is depressed as Government needs to spend
issue. Various other indicators of now due to the factors cited more now to overcome the
such as sales of passenger and above and is difficult to revive situation.
commercial vehicles production of unless some external force is Let Indian Rupee be weaker
capital goods, consumer durables, applied for example – tax sops, Even a weaker Indian rupee
steel and cement,use of air travel incentives for investment, should not be a problem.
had shown contraction or poor creating demand for certain Stronger rupee is hurting both
growth. products through public funded the exports and the business.
No demand - No Investment: projects among others. Lower Lending rates
Vicious Circle operates. When there is no demand, supply The recently announced
Since it is capital formation, or has to be stopped due to piling up monetary policy of RBI has not
investment, that drives growth in of stocks and production units go given any relief to boost Indian
the economy, investment is an idle, leading to cut in labour force. economy. The economists now
immediate source of demand as It further reduces the income advocate a steep rate cut in the
firms that invest buy goods and leading to less demand and further benchmark lending rates to
services to do so. reduction in supply and stopping allow for monetary policy
It also expands the economy’s of production. expansion.
Jaipuria Institute of Management, Jaipur MIND AUDIT | [ 2 ]
 Govt wants private carpooling to
be a no-profit no-loss service
The road transport ministry has firmed up
draft guidelines for ride-sharing by
private car owners, which will mandate
KYC for users and limit the maximum
number of rides taken per day to four.
The Centre wants to ensure that
carpooling is done on a no-profit no-loss
basis. So, a vehicle owner must operate
on a model where only the cost of the
ride is split. Also, pooling by private
vehicle owners will be allowed only
through mobile apps. Aggregators will
need to ensure that KYC — or, the
process of verifying the identity of a
client — for both the vehicle owner and
the riders is complete. The vehicle owner
will have to declare trip details before the
start of a trip.The new guidelines will also
ensure that the states get some revenue
from carpooling.
Existing carpooling apps such as Quick
Ride and BlaBlaCar will need to tweak
their applications to meet the new
RBI to offer small finance bank
licenses to payments banks
The Reserve Bank of India is mulling on
offering fresh licenses for setting up small
finance banks, which can be availed by
payments banks as well. Payments banks are
not allowed to offer loans, take NRI deposits,
set up non-banking-financial businesses or
issue credit cards. The report says that if
allowed to become small finance banks,
payments banks would be able to offer
microloans. In July this year, India Post
Payments Bank said it will be converted into a
small finance bank.
A challenging business model
Conceptualized by the RBI in 2014 to extend
banking services to those unsupervised by
traditional banks, payments banks seemed
Jaipuria Institute of Management, Jaipur
requirements.Cab aggregators such as Uber
and Ola will need to develop a separate
platform to allow pooling by private vehicle
owners. One of the agenda items for the
National Mission for Transformative Mobility
is vehicle pooling and the guidelines will be
largely in tandem with the same.In June this
year, the Karnataka transport department
asked Ola and Uber to discontinue the
“ridesharing” feature on their mobile
applications on the grounds that it was
hurting the income of cab drivers.As part of
wider guidelines to incentivise electric
vehicles, the Centre in a letter issued on July
17 had also asked state governments to
promote shared mobility to reduce congestion
on roads, and tackle pollution at the same
time.
like a new model of banks in which deposits are
restricted to Rs 1 lakh. Apart from that, RBI’s master
circular on prepaid payment instruments (PPI),
released in February, directed that users who do
not complete the full KYC process will not be
allowed to load money into their wallets – this
requirement has made customer on-boarding
expensive for payments banks, who have been
urging the RBI to look into video KYC as a possible
alternative to in-person KYC in order to reduce
costs.
MIND AUDIT | [ 3 ]
Masters of Business in
Asia
Source: The Economist

ASIA’S RISING economic power is

remaking the world. Chinese
corporate champions like Alibaba
and Baidu are challenging their
Western counterparts.
In America, Asian students were
unfamiliar with corporate culture
and even company names. They
may have been more self-conscious
about speaking in a second
language in a second country. In
Hong Kong they felt, naturally,
more at home. A difference was in
the attitudes of MBA students
towards leadership styles. Mr Fong,
conducted a survey of MBA alumni
and current and past students on
HKU’s executive MBA course
(which like other such courses is
part-time and aimed at people
already involved in running
companies).
The survey found that Asian
respondents were more tolerant
than their Western counterparts at
HKU of undesirable leadership
characteristics such as
authoritarianism and asociality
(each group disliked such traits, but
western respondents disliked them
more). It also revealed that those
who worked for local companies
were less enthusiastic about
performance-oriented leaders than
peers employed at Western firms.
Mr Dekrey runs a programme for
developing independent directors to
plug the gap. His school is also
encouraging students to think of
corporate “purpose”, beyond making
money. Whereas firms in America or
Europe increasingly profess to care
about things other than the bottom
line (with varying degrees of
sincerity), that is a nove idea in Asia,
where executives are mostly guided
by the pure profit motive.
Business schools can only teach all
this to students who enroll. Asia Inc
has yet fully to appreciate the
benefits of an MBA education. That
is the last big difference from the
West.
When the British empire was
expanding, a saying went, “trade
followed the flag”. Perhaps today
business education follows
economic power. One day Chinese
management styles may come to be
seen as exemplars for international
companies—and Chinese business
schools may rival the top American
ones.

Books Reading List Read Smarter

IIM Ahmadabad Exclusive: Reaching the Top

Blue Ocean Strategy: Kin W. Chan
Marketing 4.0: Philip Kotler
Emotional Intelligence: Why It Can Matter
More Than IQ: Daniel Goleman
Too Big to Fail: Andrew Ross Sorkin
Barbarians at the Gate: Bryan Burrough and
John Helyar
The Wealth of Nations: Adam Smith

Jaipuria Institute of Management, Jaipur MIND AUDIT | [ 4 ]

 Managing a Colleague Who Wants to
Impress You All the Time
- Harvard Business Review

Every leader knows they shouldn’t play favorites — it can lead to dissatisfaction
and discord on a team. There are even some surprising disadvantages for the
person who is the focus of the boss’s special attention. But there will always be
team members who want to make it into your inner circle, and sometimes a
subordinate can be singularly focused on pleasing you and gaining your favor.

Avoid feeding their need to please.

Because of your power and their fear, you may have to watch yourself more
carefully than you do with other subordinates.

Structure your interactions to balance special attention with objectivity.

If you have weekly one-on-ones with your direct reports, make sure everyone
gets the same amount of time (even if the pleaser requests more) and be sure
you’re giving kind and simultaneously rigorous feedback to everyone. Relying on
concrete scheduling and project management tools can be especially important,
if you work in an office where people drop in for ad hoc discussions and the
person could monopolize your time.

Guide them to develop their own decisions.

Ingratiating employees may be overly worried that you’ll be unhappy with them
or their work; the thought of disappointing you can become overwhelming for
otherwise competent, experienced people.

Assign them to work with other leaders or project teams.

This will take the pressure off the unhealthy dynamic between you and increase
the potential for them to collaborate better with others. In fact, research has
shown that fawning on the boss can diminish self-control; pleasers may put so
much energy into observing and interacting with you that they exhaust their
capacity to deal with others, particularly when they’re stressed or frustrated. By
explicitly directing their attention away from you, you’ll learn whether they have
the capacity to behave better with their colleagues.

Jaipuria Institute of Management, Jaipur MIND AUDIT | [ 5 ]

 Business Terminologies
Bid-offer spread
The buying (offer) and selling (bid) price of shares, bonds or currency. The ‘spread’ is
the difference between those two prices.
Business angel
Also known as an angel investor. An individual who provides capital for a business
start-up in return for a stake in the company.
Collateral
Collateral is something lenders can use to give security against a loan. Often this is a
major asset such as a house.
Horizontal merger
When two companies within the same industry and at the same stage in production
merge together.

Note: Consider your GD as discussion

Group Discussion but not a debate, your discussion
should bring out the conclusions
(Do's and Don't) agreed by all the participants

Jaipuria Institute of Management, Jaipur MIND AUDIT | [ 6 ]

 We are accepting contributions from faculty, staff, and students.
Email us at: tnd.jim.jaipuria@gmail.com

Training &
Connect us on Social Media: tnd_jim_jaipur Development@Jaipuria_Jaipur

T & D Committee
Dr. Akash Dubey (Faculty Head)
Rishab Gupta (Head), Harsh vardhan , Shilpi Sharma,
Radhika Lahoti, Jatin Hathiyani, Ketan Roongta,
Pankaj Sen, Priya Sharma