The task force on shell companies set up by the government has identified more than 2.25 lakh such firms which will be removed from the register of companies in the current financial year, an official statement said on Friday.

A Finance Ministry release here said that in the 2017-18 fiscal ended March, the registrar of companies (ROC) removed the names of over 2.26 lakh companies from its register and disqualified 3.09 lakh directors.

“During financial year 2017-18, ROCs identified and removed from the register of companies the names of 2,26,166 companies, while 3,09,619 directors were disqualified,” it said.

“A second drive is to be launched during the current financial year 2018-19. A total of 2,25,910 companies have been identified for being struck-off under section 248 of the Companies Act.”

The task force under the joint chairmanship of the Finance and Corporate Affairs Secretaries had been constituted last year. It has compiled a database of shell companies by the Serious Fraud Investigation Office, the statement said.

“The ex-directors/authorized signatories of the struck-off companies have been restricted from operating the bank accounts of these companies and they cannot withdraw any amount from these bank accounts, other than for specified purposes, till the company is restored u/s 252 of the Companies Act,” it added.

The central bank’s first interest rate rise since Prime Minister Narendra Modi came to power could not have come at a worse time for a government grappling with spending constraints, voter discontent in the rural heartlands and rising oil prices. The rate increase, the first in more than four years, is likely to be followed by one or two more this year, economists predict, pushing up overall borrowing costs for the government and companies alike.

Higher interest rates are likely to make it tougher for the government to borrow from the market and hurt a recent pick-up in the economy while dampening revenue collection and burning a bigger hole in the government’s fiscal deficit than the budgeted target of 3.3 percent of gross domestic product (GDP).

For Modi that represents a double whammy, as he looks to step up spending to woo disgruntled voters ahead of a general election next year without spooking skittish foreign investors. The fiscal maths are getting challenging on rising fuel prices, a weakening rupee, and subdued investments.

“This could be the worst year for us, as budget calculations are under stress,” a senior finance ministry official, who declined to be named, told Reuters, adding there was a worry of at least one more rate hike by December.

“The rising crude oil prices are already giving sleepless nights as the government may have to cut the tax on fuel products sooner rather than later,” the official added.

India’s economy grew at 7.7 percent in the first three months of the year, the fastest pace in nearly two years. That would be an impressive clip for most countries, but more is needed to create enough new jobs for the 1 million young people entering the country’s workforce each month.

Feeling the pressure

The government’s spending plans have already been threatened by setbacks to flagship reforms.

An estimated $1.2 billion-$1.5 billion Air India privatization plan flopped when the stake it was selling in the flag carrier failed to attract a single bid by last week’s deadline, putting at risk its Rs 800 billion ($11.93 billion) divestment target.

Meanwhile, the sovereign 10-year bond yield has risen by 60 basis points since the start of the fiscal year in April, and is near a three-year high due to a lack of investors. Similarly, top-rated corporates, including National Bank for Agriculture and Rural Development, Small Industries Development Bank of India and National Housing Bank, have deferred their bond issuance plans due to a lack of buyers.

To top this, foreign holders have sold a net $4.3 billion of Indian debt so far this year as investors have grown wary of emerging economies facing twin fiscal and current account deficits and higher inflation that could pose overheating risks.

The stock market has held up so far, but some analysts caution that concerns over a loosening of fiscal discipline ahead of the election could trigger equity outflows as well.

The Reserve Bank of India (RBI) raised its key repo rate on Wednesday by 25 basis points to 6.25 percent — the first change since a cut of the same size in August last year — as higher oil prices, a sharp fall in the rupee and potential stronger consumer spending threatened to spur inflation beyond its 4 percent medium-term target.

“The rate hike will push up the government’s interest financing cost and add to the fiscal deficit pressure on one hand,” said Soumya Kanti Ghosh, chief economist at State Bank of India. “And on the other hand, the nascent recovery in growth on the back of consumption demand will also slow down as retail lending rates will go up sooner than later.”

Modi’s election bugle

After a setback at a by-election in Uttar Pradesh last week showed Modi’s waning popularity in the countryside, where most Indians still live, the government has stepped up its so-called populist spending to please the voters.

Already the government has unveiled a support package for sugar farmers to put a floor under prices that could cost about Rs 40 billion ($597 million) outside the budget.

Further measures, including loan waivers to farmers by regional governments, higher minimum purchase prices for grains, fuel subsidies to prevent pump prices from rising sharply and higher than budgeted rural wage payouts could blow a big hole in the fiscal deficit.

That could set up the RBI for a face-off with the government and also prompt further rate increases after it warned in its monetary policy statement that moving away from the fiscal deficit roadmap could push up inflation risks.

“India’s combined fiscal deficit is already quite high and since this is an election year, both state and central governments are coming up with populist spending steps which will push up the fiscal deficit and add to inflation pressures,” said A Prasanna, chief economist at ICICI Securities Primary Dealership. “This increases the probability of further rate hikes.”

The fourth anniversary of the Narendra Modi government has led to much discussion about its track record on the Indian economy. Predictably, the pros and cons have divided among ideological lines, making it difficult to have an impartial view. Thankfully, we now have the Reserve Bank of India’s (RBI’s) consumer confidence survey, which should be free of bias.

The survey is conducted in the six cities of New Delhi, Mumbai, Bengaluru, Chennai, Kolkata and Hyderabad and therefore reflects opinions among the citizens of metropolitan India.

The RBI survey says that 48% of those surveyed in May 2018 felt that the general economic situation has worsened from a year ago, while 31.9% said their economic situation had improved. That gives a net response of -16.1 percentage points (31.9 less 48). Four years earlier, in June 2014, the net response was -14.4, better than it is now.

The consumer confidence survey also has data on people’s expectations—whether they expect economic conditions to get better a year from the date of the survey. In May 2018, the percentage of respondents who thought the economic situation would get better was 49.5%, while 27.8% thought it would worsen. That sounds good, until we consider that the June 2014 survey had 56.7% who thought the economy would get better in a year’s time and only 17.6% who thought it would get worse.

Expectations about the economy have come down sharply.

Data for perceptions and expectations about employment. It shows that people’s perceptions about the availability of jobs have worsened considerably, as have expectations about job prospects.

people think their incomes have increased or decreased in the last one year and whether they expect improvement in the next year. The survey numbers show a similar trend of fading expectations. Slightly more than half—50.8%—of those surveyed in May 2018 expect their income to increase in the next year. This measure was as high as 63.9% in June 2014.

In short, the National Democratic Alliance government has a tough task on its hands in the one year before the elections to change the mood of disillusionment.

India is blessed to be the third-largest start-up economy in the world. Unfortunately, there is a curse that comes with that blessing. That is, as indicated in a 2016 report issued by the IBM Institute for Business Value and Oxford Economics, 90 per cent of Indian start-ups fail within five years.

The question is what can be done to reduce the number of failures? What are the secrets to success for India’s budding entrepreneurs and its business start-ups? There are many. But, based upon research findings and my own experience as an entrepreneur, I would like to highlight a critical few.

The IBM/Oxford report cited the lack of innovation as the primary reason for failing start-ups. A 2017 report by KMPG India and the Confederation of Indian Industry (CII) cited innovation, along with scalability and digitisation, as one of the three pillars for building a sustainable business.

So, what does an entrepreneur do to innovate? Here is the surprising answer that Vivek Wadhwa, a noted American IT researcher, academic, writer and entrepreneur, gave in an article in the Washington Post on April 30: “In a video-conference hosted by Indian start-up website Inc42, I gave Indian entrepreneurs some advice that startled them. I said that instead of trying new things, they should copy and steal all the ideas they can from China, Silicon Valley and the rest of the world.”

Wadhwa goes on to explain that the reason that Silicon Valley is the international leader and hotbed for information technology is that there is considerable “knowledge sharing” as engineers move from company to company. He observes that tech giants such as Facebook and Apple borrow and build on the ideas of others.

The KPMG/CII report makes a similar point on innovation, stating: “Not all innovation is radical or breakthrough. Innovation can also be incremental, yet small materially significant changes to the current operating model or products or services.”

I would extend that even further to recommend that the focus for entrepreneurial innovation should be encompassing — considering potential improvements in the areas known as the 7 P’s of services marketing: Product, Pricing, Place, Promotion, People, Process and Physical Evidence.

In addition, based upon my experience as an entrepreneur who took an information technology firm, the QSS Group, that I purchased in 1994 for $45,000 and one employee — me — to sales of over $300 million and 3,000 employees when I sold it to Perot Systems in 2007, I would offer the following advice that I gave in the keynote address to the participants at US-India Start-Up Forum sponsored by American Bazaar in Mumbai, in February 2017:

* Believe in yourself and your business. Pursue your end goal with drive, determination and a passion to succeed.

* Find and focus on your niche market. Figure out early on who will be your target customer segments and key customers within those segments and build your business model around them.

* Deliver quality products and services that exceed customer expectations. Merely satisfying your customer is not good enough. They need to receive the unanticipated in order to become loyal. This is as true for the neighborhood kirana stores as for Apple and Google.

* Surround yourself with talented people. Pay them well. Listen to them. Learn from them. And work closely with them. Remember, business is a team sport and not an individual one.

* Have no fear of failure. India is a market where investors have little tolerance for failure. But fear can be crippling. Put your faith in your plan and yourself and carry on.

While the strategies and tactics will differ given the nature of the business, I believe that addressing those five factors, along with the need for ongoing innovation, are cross-cutting and can be used by an entrepreneur to provide the framework for becoming successful in any start-up line of business.

There is no single formula for success, however, and the future is promised to no-one. Therefore, I will close with this final thought.

In a commencement address at Stanford University, Steven Jobs advised the graduates: “Your time is limited; so don’t waste it living someone else’s life.”

For budding entrepreneurs and owners of start-ups, I would modify Jobs’ advice and say: “Your time is limited; so don’t waste it trying to emulate someone else’s business. Don’t be a mere ‘me too’ business. Don’t be a clone. Find your inner entrepreneur. Chart your own path. Create a mission, vision and set of values that are unique to your enterprise. In other words, make it your journey. By doing so, you will define those secrets to success that will enable you to grow your small business of today into the big business of tomorrow.”

Broadly negative global cues along with caution ahead of the RBI’s monetary policy review depressed the key Indian equity indices on Tuesday.

According to market observers, heavy selling pressure was witnessed in the capital goods, consumer durables and IT stocks.

Around 3.30 p.m. the broader Nifty50 of the National Stock Exchange (NSE) provisionally closed at 10,593.15 points — down by 35.35 points, or 0.33 per cent — from its previous close.

The barometer 30-scrip Sensitive Index (Sensex), which opened at 35,029.45 points, provisionally closed at 34,927.09 points — lower by 84.80 points, or 0.24 per cent — from its previous session’s close of 35,011.89 points.

Sensex touched a high of 35,073.12 points and a low of 34,784.68 points during the intra-day trade.

On Monday — the previous trade session — both the indices closed in the negative territory as caution prevailed over the Reserve Bank of India’s second monetary policy review.

Consequently, the NSE Nifty50 closed at 10,628.50 points — lower by 67.70 points, or 0.63 per cent — from the previous close.

Similarly, the barometer S&P BSE Sensex settled in the red. It had opened at 35,503.24 points and closed at 35,011.89 points, 215.37 points or 0.61 per cent lower from the previous session’s close at 35,227.26 points.

Former IDBI Bank MD and Chief Executive M.K Jain was on Monday appointed a new Deputy Governor of the Reserve Bank of India (RBI) for a period of three years, an official statement said.

The appointment was made by the Financial Sector Regulatory Appointment Search Committee, which includes the Reserve Bank of India (RBI) Governor, the Financial Services Secretary, besides other independent members.

The post of one of the Deputy Governors at the Central bank fell vacant after the retirement of S.S. Mundra on July 31, 2017.

Jain has been at his current post at state-run IDBI Bank since April 2017 and has previously served as the Chief Executive of Indian Bank. A career banker, he has also been a member of the Indian Banks’ Association Committee on risk management.

The government had advertised for the post of RBI Deputy Governor in January this year and as many as 40 applications had been received in response, according to sources.

Top officials of both public and private banks will brief the Parliamentary Standing Committee on Finance in New Delhi on Monday (June 04) on the issue of mounting Non-Performing Assets (NPAs) and bank frauds.

The meeting is being called after the RBI Governor Urjit Patel said, the central bank does not have adequate powers to deal with public sector banks.

The panel has also called Patel to brief on the same issue later this month.

According to official data, gross NPAs of state-owned banks has touched 8 lakh crore rupees at the end of last year.

Hindusthan Samachar/Shri Ram Shaw

India will today (Monday, June 04) receive the first ever cargo of liquefied natural gas (LNG) from Russia.

State-owned gas utility GAIL India Ltd will bring the shipload of LNG from Gazprom, a Russian supplier, at Petronet LNG Ltd’s import terminal in Dahej, Gujarat.

Petroleum and Natural Gas Minister Dharmendra Pradhan will receive the first consignment at the terminal.

New Delhi is diversifying import basket to meet its vast energy needs.

Hindusthan Samachar/Shri Ram Shaw

 Banking majors SBI and PNB on Friday hiked their benchmark marginal cost of funds based lending rate (MCLR) for its one-year loans by 10 basis points, effective from June 1.

A basis point is equivalent to 0.01 percentage point.

Prices of petrol and diesel fell around nine paise in the four metro cities on Saturday.

In the national capital, petrol was sold at Rs 78.20 per litre, down from Rs 78.29 on Friday, data on the Indian Oil Corp’s website showed.

In Mumbai and Chennai, petrol prices were at Rs 86.01 and Rs 81.19 a litre respectively, down nine paise from Friday’s levels.

In Kolkata, petrol price fell by eight paise to Rs 80.84 per litre.

Prices of the key transportation fuels have been cut marginally on a daily basis, under the dynamic pricing system since May 30, as global crude oil prices began to ease. Currently, the Brent crude oil is priced around $76 per barrel.

In tandem with petrol prices, diesel prices also witnessed a downturn. In Delhi, Kolkata, Mumbai and Chennai, the fuel was sold at Rs 69.11, Rs 71.66, Rs 73.58 and Rs 72.97 per litre, all prices down nine paise from Friday’s level.