Problem 2 - Falling Borrower Confidence and Economic Failure
Borrowers once borrowed a lot of money. Even if 8% defaulted, 92% paid off their loans and interests well and kept the clock ticking.
Today Borrowers are very hesitant to borrow money to invest in India. The criminalization of defaults is a huge reason. Most Borrowers decide not the expand their businesses or decide to invest overseas. Even the Big Companies (Except Reliance and Adani who have a Crony link) are investing overseas.
So rather than 10000 eggs in 100 baskets , we have 10000 eggs in 15 -20 Baskets which is far more risky.
Banks are lending more and more to fewer and fewer borrowers and due to Demo they have huge liquidity to get rid of.
Solution - Dont Criminalize defaults without strong evidence, Increase NPA classification period from 90 days flat to 90 days -5 Years depending on the nature of loan, RBI must be held accountable for missing things in audits, Pay more money to Valuators but hold them accountable for wrong valuation
Problem 3 - Lack of Foreign Investor Confidence in India Inc
Sure FDIs have increased as per reports.
Yet most of those FDIs are investment into Companies and their shares rather than investment into the Indian Economy and People.
For instance in 2020 - FDIs rose by 64% relative to 2019 but 91% of those FDIs were related to 5 Specific Companies. This only causes bloating of shares of these companies. Ambani may have another 400 Cr wedding for another daughter but it wont affect India by even 0.1%
Foreign Investors hate our Tax Structure (Toyota, Bosch, Volvo and Caterpillar have all scrapped their Phase III and Phase IV investments into India from 2017–2020 and Nokia packed up and left), our Labor Laws (Winstron did not produce for 182 days, in China over 4 years the non productive days were 7 ), Our Judicial Horror System (Cairn Energy, Amazon, Rolls Royce)
Solution - New Courts consisting of 49% Foreigners to arbitrate disputes involving foreign investors with no SC jurisdiction, Standard Labor Laws, Zero Tax Laws etc. You want your people employed, DONT BE GREEDY FOR TAX.
Problem No 5- Mediocrity and No Quality related standards