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Is Ambani’s cutting debt a bad omen for India?

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Mumbai: Mukesh Ambani conducts a general meeting on Monday regarding the annual sales with the stakeholders planning for future endorsements. Ambani plans to cut off the debt taken from banks and take the company to zero debt. But his actions reveal more than in the story.

He endorsed Modi’s vision of bumping up annual GDP by 80% in five years to $5 trillion; he even forecast a $10 trillion Indian economy by 2030. It’s not only possible but “inevitable,” he said. Ambani tackles the situation by bringing in the South Armaco and selling 20%share of reliance refineries which would clear off its debt. However it looks a good step to take $75 trillion from Armaco and making Indian Giant debt free which would also add up money on the Indian banks but only if it’s for the benefit of the nation.

Now that Jio has reached 340 million subscribers, though, the endgame is probably not more than a few quarters away. And that can be problematic for the country’s economy. The rest of India Inc. is paralyzed by debt and self-doubt; consumers are overstretched; and so is the government. A holiday for Reliance would remove from play the only domestic balance sheet with unspent firepower.

A $22 billion reduction in net debt (to reach zero) will require more than Aramco’s cash. Reliance has shoved some borrowings into an infrastructure trust together with telecom tower and fiber assets. As for shareholders, Ambani is telling them that hitting zero net debt will come with higher dividends, bonus issues and other goodies “at a more accelerated pace than any time in our history.” But investors will struggle to reinvest the cash returned by Reliance. For one thing, India’s slowdown is deepening. For another, the company’s digitization blitz is causing unpredictable disruption.

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NITI Aayog Deputy Chairman said – Reforms do not mean complete abolition of labor laws.

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Concerns have been raised by many labor organizations about changes in labor laws in many states. The NITI Aayog, while trying to clarify things in this regard, has said that the government is committed to protecting the interests of workers. NITI Aayog Deputy Chairman Rajiv Kumar said that the strength of reforms is not to abolish the labor laws altogether. 

In recent weeks, various state governments, including Uttar Pradesh and Gujarat, have either amended or proposed amendments to existing labor laws. The industry has been badly affected by the restrictions imposed to prevent the corona virus. This step has been taken by the state governments to provide relief to industry and companies.

Kumar said, “It has come to my notice that the Union Ministry of Labor has tightened its stand and made it clear to the states that they cannot abolish the labor laws, because India has signed the International Labor Organization (ILO) Is in countries.

He said that it is clear that the Central Government believes that reform of labor laws does not mean abolition of labor laws. The government is committed to protecting the interests of workers. He was asked whether labor reforms could be done by states like Uttar Pradesh and Gujarat without creating any kind of safety net for the workers. 

The Uttar Pradesh government recently exempted various industries from certain labor laws for three years through an ordinance. The government has taken this step to speed up the economic activity affected by the Corona virus. The Madhya Pradesh government has also changed some labor laws to encourage economic activity amid nationwide bandh. Some other states are going to take similar steps. 

On the macroeconomic situation of the country, the Deputy Chairman of NITI Aayog said that like the rest of the world, India is also facing the adverse effects of Covid-19. This epidemic has severely affected economic activity during the first two months of the current financial year. 

The Reserve Bank has said that India’s gross domestic product (GDP) growth rate in the current financial year will be negative. To this, Kumar said that the negative growth is yet to be fully predicted. Right now, many things are unknown on the domestic and global front. 

Kumar said that the aim of the government’s Rs 20 lakh crore economic package is not just consumer demand, but to improve aggregate demand. He said that the Reserve Bank has taken several measures to increase cash in the system. The Finance Minister is also encouraging banks to increase the flow of credit. This will help increase the total demand of the economy. 

He said that it is important now that the financial sector especially banks should not avoid taking risks and increase the flow of credit to other sectors including micro, small and medium enterprises (MSME). If this happens, demand will arise and we will see improvement in economic activity in the country. 

Asked whether the Reserve Bank should monetize the deficit, Kumar said that the government was considering all possible options for financing the stimulus package. On the possibility that companies exiting China may turn to India, Kumar said that if we bring the right policies to target companies, I see no reason why these companies will not come to India. 

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