PM Narendra Modi was justified, as a responsible leader foreseeing a crunch in foreign exchange, to advise citizens to be circumspect in its use, for a year. He advised citizens to desist the purchase of gold and to avoid celebrating weddings abroad, in a bid to conserve it. As a leader, his caution in so advising can be expected, even though it may be unwelcomed by a populace that loves a gilded safety net.PM Modi should have tracked the movement of the INR, which is influenced by policy decisions of Governments, versus that of gold. The common citizen has seen the relative performance, given below, and has been right to park his savings in gold, as a store of value.

As can be seen, India’s past governments have, with their myopic policies that stifled enterprise and promoted mediocrity, murdered the currency. The INR has emulated the Titanic, sinking to new lows, whilst gold has risen like the Chinese balloon that floated over America.

Citizens could take the decision of choice over wedding venues under advisement; India has some of the best wedding destinations, and the spend would benefit domestic tourism and service providers, instead of foreign ones. A big fat Indian wedding held in India would help fatten the domestic economy. But it remains, ultimately, a choice for the bride and groom.

Whist on the topic of over-spending, one wonders why Indian Governments are soporific about non performing public sector units (PSUs).

Immediately after India gained Independence in 1947, PM Jawaharlal Nehru desired that the public sector should have a dominant position in manufacturing industries, especially in heavy industries requiring large capital investment. In pursuance of this, the Central Government has, as per ChatGPT, established 748 PSUs. Of these, financial data is available for 688, of which 226 (33%) are making losses. The aggregate losses of these 226 units amounts to ₹ 36000 crores, but the profit making ones more than make up, so the aggregate net profits are ₹ 3.46 lakh crores (trillion).

It is the State Governments that are the culprits re loss making PSUs. They have, cumulatively, 1635 units, and data is available for 1107. Of these, 449 are loss making, and the accumulated loss is ₹ 1.14 lakh crores.

The Government must push harder on States to auction the perpetually loss making units within a certain time frame, paying compensation to the employees, rather than continuing to use tax payer resources to fund them perpetually. Tax payer resources should be used constructively, not to continue promoting loss making units.

Measured by number of loss making PSUs Kerala leads, with 66. Measured by value of losses, UP leads with ₹ 32400.

The most ludicrous example is Hindustan Fertilisers. It was started as Haldiram Fertiliser by West Bengal Government, at an estimated project cost of ₹ 88 crores. The Centre took it over and the name was changed to Hindustan Fertiliser Ltd. The completion date of the project was 1979.

Now here is the part that turns it into a Kafka novel – since 1979 the company hasn’t produced any fertiliser at all! Zilch! Nada! Nix!

Yet the zombie employees came to work every day, as illustrated above, got their salaries, leaves, bonuses, increments, all funded with tax payer money. In 2016 a “restructuring” package resulted in wipe out of loans of ₹ 1916 crores and of accumulated interest of ₹ 7163 crores.

Who is the sucker? The tax payer, of course. There is no accountability to the tax payer by a Government, whether Centre or State.

Why do Governments pour good money after bad?

Alongwith advice given to citizens not to buy gold or splurge on weddings abroad, PM Modi is also bound by position, prudence and obligation to order a time bound closure of perennially loss making units, not pour good money into them. As any good surgeon will tell you, the remedy for a limb with gangrene is amputation, not blood transfusion. PM Modi, and CMs of States should sell perennially loss making PSUs instead of constant funds transmissions.

Not only do tax payers suffer for such improper utilisation of taxes collected from them while they live, they also continue paying for their rights after their elders pass, because of corruption. As per this article in Moneylife a whopping 73% of families are forced to pay bribes at land registration offices to get the deceased relatives’ assets released! Humanity has lost its soul!

Last week the BSE Sensex closed at 74781 for a weekly loss of 1734 points.

The startup ecosystem in India is, thankfully, rising to the occasion and coming out with an impressive array of products, several base on high tech, and they provide jobs that the manufacturing is not throwing up enough of.

Sagar Defence Engineering, a start up established in 2015 by Capt. Nikunj Parashar, recently unveiled a 13 meter long unmanned surface vessel called Matangi which successfully navigated 1500 kms on the high seas without any crew! The seed money came entirely from the founder, with a 14 year career in merchant shipping, turned entrepreneur. Matangi is like Tesla’s cyber cab, but on water.

Besides Matangi, Sagar Defence has also launched Varuna, a drone that can carry a human, used in speedy evacuation for medical emergencies or rescues, Autonomous Underwater Vehicles, used in defence and monitoring, underwater hull inspection and deep sea data collection, and others.

In unmanned naval vessels, it competes with the likes of, among Indian companies, EyeROV (an ocean tech robotics company), L&T Defence and Mazagaon Shipbuilders. Some of its foreign competitors include Liquid Robotics, a Boeing company which has partnered with Sagar Defence; Saronic, a heavily funded US company whose autonomous vessel, Corsair, successfully rescued an American pilot shot down by Iran recently; L3 Harris Technologies, which uses unmanned vessels for mine hunting and electronic warfare, and others.

Startups provide optimism. Retail investors provide the committed funds, via systematic investment plans, that drive the market. These represent hope for the future.

On the other side the judicial system provides the anchor of delayed judgements that drag India’s growth. Corruption is a spreading cancer that can kill India’s growth story. Unviable PSUs on forever life support systems are the arterial blocks. And Goverments who, eye on the next election, fail to address these structural problems, are the millstone.

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Comments can be emailed to: jmulraj@asiaconverge.com