"Rescuing IL&FS group, which has total debt of $12.6 billion -- 61 percent in the form of loans from financial institutions -- is vital for authorities to stem the risk of default spreading to other lenders in the world’s fastest-growing major economy."
This is one of a series of massive scams under PM Modi's guidance where tax payers money of India has been looted and stuffed into the pockets of crony billionaires.
The audit committee Chairman and the first independent director of this project in Gujarat himself has filed a public interest litigation to uncover the fraud.
"Gujarat International Finance Tec-City—GIFT City for short, a showpiece project of the Gujarat government, faces an extraordinary public interest litigation (PIL) filed by DC Anjaria, Gift City’s first independent director and former audit committee chairman. The petition alleges that this Rs70,000-crore project has virtually been gifted away to the private sector partner, Infrastructure Leasing & Financial Services (IL&FS), leading to massive losses to the government and the people."
Complete details on IL&FS scandal.
Everything about the IL&FS crisis that has India in panic mode
As India comes under pressure of falling rupee and rising oil, Govt is cutting expenditure and has quietly hiked import duties on widely used items.
Less borrowing for a growing and insolvent economy means less expenditure which means less growth in the future due to lower bank lending and lower Govt spending.
In line with all the above, various large banks are in trouble.
In 2017, 6 banks were already merged.
Just a week before in Sept 2018, 3 more bank were announced to be merging.
Today, 1 Oct 2018, it has been announced that the largest bank of India (who perhaps controls over half the banking business across India) has halved ATM withdrawals at a time when globally, countries are pushing ATM's due to convenience.
Thousands of ATM's have also been shut across India because banks don't have money to support unprofitable ATM's.
Also on 1 Oct 2018, Govt has admitted that there is a cash crunch and they are injecting more cash into the system.
"The Reserve Bank of India (RBI) said on Monday it would pump 360 billion Indian rupees ($4.95 billion) into money markets in October in its latest attempt to stem fears of a cascading credit crunch, pledging to buy back bonds after the government dramatically reduced its own borrowing by 700 billion rupees on Friday."
While all the above has happened just over the last several days, now, IL&FS a major company is at the verge of a collapse that could become the Lehman monment if it is not saved under duress by the Govt and throw away billions of dollars of tax payers money.
India currently has the highest banking bad loans in the world.
Lot of these bad loans have come into default due to collapse in business because of demonetisation, digitisation, highest and most complicated GST in the world, fraud, corruption, stoppage of money churning from abroad from Mauritius etc and this is the result where millions of businesses have collapsed across India.
And therefore, these banking bad loans have tripled since 2014.
Bank after bank is in crisis in India
If the stock market index, Sensex, drops below 35,000, it will hit 30,000 within a few weeks and if it goes below 30,000, we can see straight down to 25,000 levels.
All this is at a time when USDINR is at USD 72.80 levels which itself is an ALL TIME low.
All this put together makes it an extremely messy affair considering that elections are to be held in less than 8 months so expect rise in volatility and further decline of markets.
Foreigners have been pulling out money in billions every month since July 2018.
If India helps stabilise the IL&FS scam, or not, it will lose either way.
One way, the company shuts and takes down dozens more. Another way, tax payers lose billions of dollars and sends it into the pockets of the mighty and corrupt of India thus creating more debt for Indian citizens.
Lehman moment of India is unravelling at a lightning speed and we don't expect that the Indian Govt will be able to manage this rapid economic collapse.
Mini capital controls are being placed, Rupee is in free fall and has become the worst performing currency in Asia, stock index is dropping, banks are in turmoil, interest rates are rising, oil price is rising, withdrawal limits are being placed right before Diwali, one of the largest NBFC's involved in infra space is collapsing, elections are coming, crime across India is sky high, real estate is simply frozen since 2016, entire country is stuck in hatred between religions, an Apple employee was shot dead yesterday for no reason at all, every month a new billionaire runs away after looting the banks, companies like Jet Airways are not paying salaries to employees, Air India is again at the verge of collapse along with Jet Airways, unemployment is at it's highest ever, esteemed institute like IIT Mumbai is unable to pay salaries. How could it possibly get worse?
We have arrived at the Lehman moment for India and next few months are very critical for the stability of entire India.
I see you are negative in every aspect.
ReplyDeleteI was trying to be less alarmist and predicted it most accurately before any other media. It's actually worse than what I have predicted.
DeleteWe try to be ahead of everybody by months and years. So it is upto you and your understanding of economics and finance.
just watch the stock markets entire next month and two.
More you may read here as of today:
IL&FS: Not Satyam, Not Lehman, Maybe it’s Both!
https://www.newsclick.in/ilfs-not-satyam-not-lehman-maybe-its-both
Manoj Nathan's views are very very very negative. He has ti go to Himalayas
ReplyDeleteBeen there, done that! But thanks for the tip. Hope to see you there.
DeleteI guess people are okay with your negative views as far as those views are for others not them.
ReplyDeleteDear Sir/Madam,
DeleteThat is the most apt comment. Most people have become so insensitive to the plight of others that it is unbelievable.
I could not have said it better.
The best comment!
Thank you for visiting and commenting.
Thanks for providing a better perspective of the whole messed up scenario.
ReplyDelete