Jose Thomas

My Blog

Thursday 26th December, 2013



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Dear Friends,

I ended my last blog promising to write more about the world economy. To me, this is a very interesting subject because I spend a considerable amount of time studying the various economies and analyzing various initiatives by different governments worldwide. Some of you may wonder what my qualification to write about this subject is. I know for a fact that I am not an economist nor am I a Harvard graduate. I am just a businessman with 40 years of real world experience. I am writing this blog purely based on the experience I have gained and I call this “my life skill”. Today anyone can go to a classroom and listen to an economics professor. To me these lectures, especially in India, are based on the past and not the present. I have gone through various textbooks and find that what is being taught today is neither of the present nor of any relevance. Even some of the best speeches delivered by authorities on various subjects are not heard by 80% of the audience and out of the 20% who pay attention, only 1% would take that and convert it to a success tool. So I wonder what the current generations going into the classrooms arelearning. A lot can be learned from reading various subjects that are written by people who are way more eminent than me where you can learn what is happening now and what is going to happen in the immediate future.

I have walked through the highway of life and faced various challenges running my various businesses and in the process I learnt a lot and this is what I am sharing with all of you. According to me, a nation’s economics is very similar to that of a business organization. It is all about policies and initiatives that produce result. Many nations base their policies on certain key factors mainly that would benefit the people. Today we see various nations taking corrective actions to come out of the financial crisis that the whole world has faced since 2008. Even some of the poorest nations who believed in socialistic ideologies are changing their policies to accommodate growth and bringing overall comfort level to the public. We all have a dream as we live in our respective countries and if you analyze each one’s dream, they vary quite a bit. But overall, if one does a detailed analysis, we will find that what everybody aspires is growth and value for taxes paid. Every economy has to produce and generate wealth as we all need money to satisfy our needs. A nation also must have enough money to feed the desire of its people. In this blog, I am again focusing on India as I believe India has great potential to grow and become a major player in the world. The country has all the right tools, including 300–400 million youth ready to ‘GO’.

In India what do we read about… the Central bank and politicians trying to ‘fix’ inflation, the GDP is falling, CAD is widening, and foreign direct investments aren’t happening. Sometimes I wonder what is in the right path. I am writing this blog with the intention of at least my readers deciding to demand more for the taxes we pay. While I agree inflation is the key factor, it is sad to see that in all other areas no action is being initiated. When our great leader Jawaharlal Nehru framed the Industrial policy of India, his dream was to generate an economy through small and medium enterprises. Today, to control inflation, our Central bank has kept the interest rate at an unrealistic level. Today the Central Bank may be trying only to work on inflation to ensure politicians who want to come back to power during the general elections are satisfied. But, is this a solution? No. Elections will come and go but one cannot forget the fact that the Indian economy is not growing!!

We have shortages of power and the necessary infrastructure and in addition to all this we have the red tapism from various government bodies. Even my company has stopped investing into further capacity or starting new industries. Today, to borrow money in India it costs at an average about 13% per annum. I always wonder how can one borrow at 13% and go through the entire process of getting the required licenses and permissions to start a business. It is very challenging. On top of this, the NPA norms existing in the county is a real scare. The large companies in India are not affected by this high interest cost because they have enough means to raise money through equity. But for those small and medium businesses that have equity limitations and then take the debt route, are making a mistake in my opinion.

70% of the world today makes money available for business at an average of around 4% per annum. How does the Government of India expect small and medium businesses like mine and many of my friends to borrow at 13% and service the debt and ensure that we do not violate the NPA norms? A healthy business needs debt or it will be like someone who has no housing loan and not even a car loan. What is his challenge? He would not even bother to find a job because he has no obligations. Same can be the situation with a business. Choice Group today has various businesses, but I do not know if you will believe that my long term debt is not even 1% of my total sales. For those of my friends who are reading this blog and who are entrepreneurs in small and medium business will understand one thing here. Even a person like JT who is supposed to be a maverick has slowed down the process of professional growth – I am simply too afraid to borrow because I am not sure if there is any business available in this country where one can make profits after borrowing at 13% and paying various taxes and ‘incidental’ expenses.

While I appreciate the initiatives taken to control inflation, I hope that India will soon start seeing measures to fuel industrial growth. Manufacturing is the backbone of any country’s economic growth. We need manufacturing for domestic growth as well as for export. Simply depending only on the service industry according to me will not be sustainable because there are many other countries competing in this sector. I hope this blog will be read in its correct meaning and sense and I must believe that soon we will see changes or else non-investment into industry and manufacturing today will impact the nation in the next few years. Starting an industry is like planting a seed – it takes time to bear fruits. As we keep increasing the interest rates and tune the monetary policies only to check inflation, it is going to impact this nation. I don’t know how many of you have thought about that. Dear friends, I wouldn’t write about this subject unless I know what I am talking about, and please trust me when I say that I do. Stay tuned…

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