Mr Sairam Mocherla a letter to Honourable Finance minister.

The writer is Mr Sairam Mocherla, Founder & Chairman Emeritus of Capital fortune pvt Ltd.,

He is a Chartered Accountant with postgraduate management degree in International Finance & Strategy from University of Pittsburgh, USA and with over two decades of experience in leadership role.

He is a former Director in the Board of Canara Bank and a close friend and guide to me in Banking and financial related issues.
Kindly go through.

Manimaran G V

Hon’ble Minister of Finance
New Delhi
Madam Minister,
In a manner of speaking, World War-2 was lost by Germany,
not just to the Allies but in equal measure to the dreaded
Russian Winter. As of end March 2020, it is a matter of relief to
see that in India, the vicious virus though not tamed, is
contained to some extent, thanks to affirmative leadership and
a largely responsive citizenry.
The lead time and global experience by now would have helped
galvanise hindsight along with foresight to reorganise our
national public & private health infrastructure, supply chains,
logistics, clinical, para medic and other corps including enlisting
of voluntary agencies to establish a multi tier, national grid of
physical & virtual command centres in hub & spoke format
including formidable reserve forces. This would address the
most essential point of care and subsistence support required
to combat the deadly virus and the lockdown

consequences.Persistent efforts with sustained intensity should
arrest the spread, cap deaths and pave the way for staggered
resumption of normalcy in our collective lives.
However, we all know that this will just be the beginning and
the cause of indomitable human spirit cannot be sacrificed at
the altar of the proverbial russian winter, ‘a slump & recession
of the Indian Economy.’The demographic dividend that is the
bulwark of the economy can very soon turn a burden in
absence of gainful employment for the majority of work force.
India and the world faces one of its grimmest challenges and
given the pervasive damage to the economic fabric across the
globe the recovery would involve bold initiatives and deep
reforms all indigenously, the likes of which we may not have
seen before.
REGAIN MOMENTUM:
It’s time to action on what it takes to keep hopes flying for the
people, to seize the opportunity from out of this crisis and
catapult India into US $5T economy and cut a seat at the table
of big players’ club. The core strategy should revolve around
protection of jobs and creating many more. Without restoring
twin inter-twined sentiment of hope & confidence of Households
and Business this will remain a pipe dream.

Business & Household Sentiment:
1. A record flight of overseas capital with Gross FPI/FII
investment outflow over ~US$ 83 Bn till 1st week of April, 20, a
free fall in Rupee which has breached Rs 76/- to a US $ and
free fall in asset prices from historical 2.8 times book to ~2
times book even in case of large cap companies and for
several mid/small size companies, at a steep discount to
replacement costs threaten the macroeconomic stability of
India.
2. This unprecedented volatility in the financial market is a
direct consequence of fear & uncertainty about the future,
resulting in a market cap loss of over US$ 600 B - the sagging
investor confidence , can drive up the cost of funds for Indian
banks and firms, that can depress further the operating results.
The lockdown is estimated to shave off over US$ 120 Bn off
our GDP leading to multiple downward revisions of FY21 GDP
growth forecast to 2-3%.
3. In the recent years, Indian systemically important firms have
faced headwinds on account of several factors:a.
Unprecedented volatility in Minerals, Metals, Oil & Gas prices
on account of global factors, trade war conflictsb. IPPs have
suffered on account of various reasons including counter party

defaults from State owned discoms, also regulatory
intransigence on open access, lack of absence of peak tariff
policy, technology disruption, tepid offtakes & dysfunctional
markets with prices ruling lower than least cost of production.
4. Telecom; predatory pricing & judicial fiatsd.
4. EPC & Infrastructure; poor contract enforcement, claims
pendency, shrinking bank credit and tight liquiditye. Real Estate
characterised by Inventory glut, change of law -
Demonetisation, GST, RERA, & steep cost increase therefrom ,
NBFC crisis & tight liquidity f. Auto and allied ; market slump,
technology disruption, regulation, NBFC crisis and tight liquidity
g. Textile & Sugar ; market slump, tight liquidity, inconsistent
state policies on procurement, captive power, adhoc state
interventions h. NBFC; drop in asset prices, industrial
recession, mega defaults, lack of alternate pools of capital,
contagion effect.i. In addition , the lockdown has disrupted
retail, entertainment, travel, tourism, F&B, hotel, leisure and
transport sectors that have significant presence of SME &
MSME companies and self-employed.
5. All these sectors support more than 50% of ~470 Mn Indian
labor force, leaving aside agriculture, the state and federal
governments5. Firms choked for liquidity will be compelled to
unleash a negative spiral of increasing unemployment, tepid
consumer spends, pervasive defaults in retail credit, depressed
growth in bank credit driving south the operating results &

onsequent downgrades in rating further depressing the
investor confidence into a vicious tailspin.
Possible Remedial Measures:
Mix of Measures for immediate, near term & medium term
impact.
Immediate Term
1. Government dole outs are useful to buy time but the only
answer can be to find a way to ensure economic activities are
restored, people are kept gainfully employed and the banking
system is sustained equally with liquidity and adequate capital
self generated. A policy formulation that provides respite and at
the same time causes lower negative impact on fiscal and
monetary targets.
2. Hum Sab Saath Hai! GOI has to believe and trust its private
sector in a joint effort to heavy lift the required economic
momentum.
3. Recent decision to refund all pending income tax refunds of
upto ~5 lakhs and all GST and Custom refunds would benefit
over 14 lakhs tax payers and 1 lakh business entities but is a
half measure. Further extension of the scheme in the form of
banks financing against the pending refund claims ITC credits
will provide significant immediate boost to tax payers and

economy (~It is estimated that ~US $14 B Income tax refund
claims are due.
4. State and federal governments and PSU’s should confirm
outstanding contract dues to private counter parties promptly.
This will allow the private players to monetize the same through
rated money market instruments at cost effective rates of
interest.
5. RBI to offer liquidity at REPO rates to banks, NBFCs (public
as well as private) to finance these through a mechanism
similar to TARP / CPCF. The odds are that banks will redeem
such funding very quickly (inside 3 years) and it will
simultaneously arrest the undesirable value erosion in
manufacturing assets (the current bane under IBC 2016).
6. To carefully identify liquidity choke points, with clear
underlying reasons and find ways to channelise credit to
systemically important , investment grade companies. Data on
Mortgages, Retail loans growth and defaults need to be closely
monitored on real-time basis and prompt policy tweaks
implemented with a sense of urgency. 7. Stipulate that the
Corporates would pay their dues to banks, MSME and SME
vendors immediately upon such a facility being granted to
ensure liquidity trickles down and multiplies efficiently.
8. The stemming of the cash flow disruption planned
meticulously should restore the upward growth curve in theeconomy driving business and household sentiment and
together priming private investments.
9. Improving credit offtake, will drive northwards performance of
banks which together with improving corporate performance
should boost investor confidence and in time lift up the sagging
markets to help equity infusion at attractive valuation.
10. Temporary rebalancing of priorities for prudent use of
Foreign Exchange reserves for current exigencies, additional
dividends from Reserve Bank could partly offset the adverse
change in fiscal and monetary targets.
11. In the immediate short term, retain interest rate on deposits despite reduction on lending rates as a monetary policy gamble will send a strong message of support to the middle class a gesture which will payback by more consumer spends which is
important for the economy now.
12.Tightening the belt where it matters can offset a part of the lockdown loss and savings on account of oil and commodity prices will be a collateral gain. Inheritance tax as a revenue enhancement measure can be evaluated closely.Near Term1. The additional liquidity will help corporates maintain ‘standard’ status on their loans and remobilise to get the wheels of economic activity rolling thereby keeping up the household sentiment and sustaining consumer demand. The flight of labour away from industry hubs will automatically be arrested.
2. Dropping frivolous litigation by the state and establishing fast
track resolution through special tribunals will boost bank recoveries and cleanse the overall financial health of the
system.3. During ~ 3years of IBC, 4 out of 5 companies referred to IBC have entered into liquidation for the lack of investors willing to submit approvable resolution plans. Recovery, excluding the large steel assets, is ~25% which is comparable even pre-IBC era recovery achieved. Further, average time taken for resolution in IBC is ~340 days- and this further tends to increase to over 400-500 days when the claims size is bigger.a. For a finite period consider to allow existing promoters to also participate in the debt resolution processes
for a quick turnaround of the stressed assets / business as against the present long drawn processes which in the end is yielding sub optimal outcomes to the lenders. Lenders may
aggressively seek equity earn outs to compensate for sacrifices. b. The onerous clauses in the Insolvency and Bankruptcy Code 2016 that excludes participation of owners who are not in willful default to be reviewed particularly for cases of default on account of force majeure, such as stranded
gas, thermal IPPs and other fuel feedstock linked projects
where state agencies have failed to fulfil contract obligations.
4. The present crop of risk taking entrepreneurs are best placed
to kick start the economy and need to be supported as long as
they are not determined to be wilful defaulters and malafide and
personally enriched by defaulting to the Banks.
5. All the above steps support strong credit growth for State
owned banks and moderate their NPA levels, thereby helping
them narrow the valuation gap with private sector banks. - Long
term median Price to Book of large corporate focused private
banks is over 2 times as compared to just ~0.6 times for large
PSU banks.6. More reasonable valuations should help
government recapitalise the Banks by making FPOs’ /QIPs/
Preferential offers to strengthen their CRAR. This can be
expected to contribute to disinvestment targets and bridge any
short term relaxation in the FRBM.
7. The combined impact of these steps should keep the
economy liquid without adding to inflation and restore the
economy quickly to its fair size and set the stage to capitalise
on the medium term opportunities to catapult at least 5 of our
banks into Global Fortune 500. Some relaxation’s on CSR for 2
to 3 years until stabilisation of core business would be
desirable.Medium Term:
8. The winds of change and shifting sands provide India the
golden opportunity to extend to the world a viable alternate and
an attractive 2nd source in the global supply chain.
9. We should swoop like an eagle and seize the moment with
alacrity & deftness by partnering countries, establishing  offshore competitive FDI & Industrial laws & regulations, liberal
policies , and the promise of long term continuity.
10. Indian annual merchandise imports totaled ~US $ 507 B in
FY19, comprising primarily Petroleum crude & products, Gems
& Jewelry, Electronics, Machinery, Chemicals & related
products, Minerals, Ores and Metals among others.
11. The focus for Indian manufacturing in the next 10/15 years
should be for substituting/reducing avoidable imports such as
Electronics, Machinery, Chemicals & related products etc. and
adding exports in areas where transitory competitive
disadvantage can be bridged by imaginative policy making and
tweaking key input costs like power and finance for designated
end use to achieve India’s strategic imperatives of a stable
currency by self-balancing (off- set) of imports and essential
exports.
12. The GOI should not hesitate in committing 1% of the GDP
for targeted outlays in catalysing these clusters. Adding
strategic depth in our bilateral engagement with Japan, UAE,
SINGAPORE, Iran, the U.S.A and even China ( in Electric
Vehicles) with a laser focus to drive outcomes on this front will
have the economy sprinting for years and create an exponential
burst of jobs for our young, enterprising and energetic Indians
and wbring regional and global talent to our shores not only in
reversal of the brain drain of 70s/80s/90s but to the golden era
of our legendary kings.

13. In addition, mega Multi billion imports for defence, nuclear,
aerospace , even power should necessarily include the
acquisition of critical technology and joint ventures with 51%
FDI should be liberally permitted.
14. These policy formulations can be formed and refined by
special economic task forces, market experts, distinguished
national and international policy makers with proven experience
in implementing bold reforms backed by hard data and driven
by key outcomes carrying the all strata of the society to deliver
a golden future of abundance for all.
Respectful regards
Sairam Mocherla ppl ppl Finance minister.

The writer is Mr Sairam Mocherla, Founder & Chairman Emeritus of Capital fortune pvt Ltd.,

He is a Chartered Accountant with postgraduate management degree in International Finance & Strategy from University of Pittsburgh, USA and with over two decades of experience in leadership role.

He is a former Director in the Board of Canara Bank and a close friend and guide to me in Banking and financial related issues.
Kindly go through.

Manimaran G V


Hon’ble Minister of Finance
New Delhi
Madam Minister,
In a manner of speaking, World War-2 was lost by Germany,
not just to the Allies but in equal measure to the dreaded
Russian Winter. As of end March 2020, it is a matter of relief to
see that in India, the vicious virus though not tamed, is
contained to some extent, thanks to affirmative leadership and
a largely responsive citizenry.
The lead time and global experience by now would have helped
galvanise hindsight along with foresight to reorganise our
national public & private health infrastructure, supply chains,
logistics, clinical, para medic and other corps including enlisting
of voluntary agencies to establish a multi tier, national grid of
physical & virtual command centres in hub & spoke format
including formidable reserve forces. This would address the
most essential point of care and subsistence support required
to combat the deadly virus and the lockdown

consequences.Persistent efforts with sustained intensity should
arrest the spread, cap deaths and pave the way for staggered
resumption of normalcy in our collective lives.
However, we all know that this will just be the beginning and
the cause of indomitable human spirit cannot be sacrificed at
the altar of the proverbial russian winter, ‘a slump & recession
of the Indian Economy.’The demographic dividend that is the
bulwark of the economy can very soon turn a burden in
absence of gainful employment for the majority of work force.
India and the world faces one of its grimmest challenges and
given the pervasive damage to the economic fabric across the
globe the recovery would involve bold initiatives and deep
reforms all indigenously, the likes of which we may not have
seen before.
REGAIN MOMENTUM:
It’s time to action on what it takes to keep hopes flying for the
people, to seize the opportunity from out of this crisis and
catapult India into US $5T economy and cut a seat at the table
of big players’ club. The core strategy should revolve around
protection of jobs and creating many more. Without restoring
twin inter-twined sentiment of hope & confidence of Households
and Business this will remain a pipe dream.

Business & Household Sentiment:
1. A record flight of overseas capital with Gross FPI/FII
investment outflow over ~US$ 83 Bn till 1st week of April, 20, a
free fall in Rupee which has breached Rs 76/- to a US $ and
free fall in asset prices from historical 2.8 times book to ~2
times book even in case of large cap companies and for
several mid/small size companies, at a steep discount to
replacement costs threaten the macroeconomic stability of
India.
2. This unprecedented volatility in the financial market is a
direct consequence of fear & uncertainty about the future,
resulting in a market cap loss of over US$ 600 B - the sagging
investor confidence , can drive up the cost of funds for Indian
banks and firms, that can depress further the operating results.
The lockdown is estimated to shave off over US$ 120 Bn off
our GDP leading to multiple downward revisions of FY21 GDP
growth forecast to 2-3%.
3. In the recent years, Indian systemically important firms have
faced headwinds on account of several factors:a.
Unprecedented volatility in Minerals, Metals, Oil & Gas prices
on account of global factors, trade war conflictsb. IPPs have
suffered on account of various reasons including counter party

defaults from State owned discoms, also regulatory
intransigence on open access, lack of absence of peak tariff
policy, technology disruption, tepid offtakes & dysfunctional
markets with prices ruling lower than least cost of production.
4. Telecom; predatory pricing & judicial fiatsd.
4. EPC & Infrastructure; poor contract enforcement, claims
pendency, shrinking bank credit and tight liquiditye. Real Estate
characterised by Inventory glut, change of law -
Demonetisation, GST, RERA, & steep cost increase therefrom ,
NBFC crisis & tight liquidity f. Auto and allied ; market slump,
technology disruption, regulation, NBFC crisis and tight liquidity
g. Textile & Sugar ; market slump, tight liquidity, inconsistent
state policies on procurement, captive power, adhoc state
interventions h. NBFC; drop in asset prices, industrial
recession, mega defaults, lack of alternate pools of capital,
contagion effect.i. In addition , the lockdown has disrupted
retail, entertainment, travel, tourism, F&B, hotel, leisure and
transport sectors that have significant presence of SME &
MSME companies and self-employed.
5. All these sectors support more than 50% of ~470 Mn Indian
labor force, leaving aside agriculture, the state and federal
governments5. Firms choked for liquidity will be compelled to
unleash a negative spiral of increasing unemployment, tepid
consumer spends, pervasive defaults in retail credit, depressed
growth in bank credit driving south the operating results &

onsequent downgrades in rating further depressing the
investor confidence into a vicious tailspin.
Possible Remedial Measures:
Mix of Measures for immediate, near term & medium term
impact.
Immediate Term
1. Government dole outs are useful to buy time but the only
answer can be to find a way to ensure economic activities are
restored, people are kept gainfully employed and the banking
system is sustained equally with liquidity and adequate capital
self generated. A policy formulation that provides respite and at
the same time causes lower negative impact on fiscal and
monetary targets.
2. Hum Sab Saath Hai! GOI has to believe and trust its private
sector in a joint effort to heavy lift the required economic
momentum.
3. Recent decision to refund all pending income tax refunds of
upto ~5 lakhs and all GST and Custom refunds would benefit
over 14 lakhs tax payers and 1 lakh business entities but is a
half measure. Further extension of the scheme in the form of
banks financing against the pending refund claims ITC credits
will provide significant immediate boost to tax payers and

economy (~It is estimated that ~US $14 B Income tax refund
claims are due.
4. State and federal governments and PSU’s should confirm
outstanding contract dues to private counter parties promptly.
This will allow the private players to monetize the same through
rated money market instruments at cost effective rates of
interest.
5. RBI to offer liquidity at REPO rates to banks, NBFCs (public
as well as private) to finance these through a mechanism
similar to TARP / CPCF. The odds are that banks will redeem
such funding very quickly (inside 3 years) and it will
simultaneously arrest the undesirable value erosion in
manufacturing assets (the current bane under IBC 2016).
6. To carefully identify liquidity choke points, with clear
underlying reasons and find ways to channelise credit to
systemically important , investment grade companies. Data on
Mortgages, Retail loans growth and defaults need to be closely
monitored on real-time basis and prompt policy tweaks
implemented with a sense of urgency. 7. Stipulate that the
Corporates would pay their dues to banks, MSME and SME
vendors immediately upon such a facility being granted to
ensure liquidity trickles down and multiplies efficiently.
8. The stemming of the cash flow disruption planned
meticulously should restore the upward growth curve in theeconomy driving business and household sentiment and
together priming private investments.
9. Improving credit offtake, will drive northwards performance of
banks which together with improving corporate performance
should boost investor confidence and in time lift up the sagging
markets to help equity infusion at attractive valuation.
10. Temporary rebalancing of priorities for prudent use of
Foreign Exchange reserves for current exigencies, additional
dividends from Reserve Bank could partly offset the adverse
change in fiscal and monetary targets.
11. In the immediate short term, retain interest rate on deposits despite reduction on lending rates as a monetary policy gamble will send a strong message of support to the middle class a gesture which will payback by more consumer spends which is
important for the economy now.
12.Tightening the belt where it matters can offset a part of the lockdown loss and savings on account of oil and commodity prices will be a collateral gain. Inheritance tax as a revenue enhancement measure can be evaluated closely.Near Term1. The additional liquidity will help corporates maintain ‘standard’ status on their loans and remobilise to get the wheels of economic activity rolling thereby keeping up the household sentiment and sustaining consumer demand. The flight of labour away from industry hubs will automatically be arrested.
2. Dropping frivolous litigation by the state and establishing fast
track resolution through special tribunals will boost bank recoveries and cleanse the overall financial health of the
system.3. During ~ 3years of IBC, 4 out of 5 companies referred to IBC have entered into liquidation for the lack of investors willing to submit approvable resolution plans. Recovery, excluding the large steel assets, is ~25% which is comparable even pre-IBC era recovery achieved. Further, average time taken for resolution in IBC is ~340 days- and this further tends to increase to over 400-500 days when the claims size is bigger.a. For a finite period consider to allow existing promoters to also participate in the debt resolution processes
for a quick turnaround of the stressed assets / business as against the present long drawn processes which in the end is yielding sub optimal outcomes to the lenders. Lenders may
aggressively seek equity earn outs to compensate for sacrifices. b. The onerous clauses in the Insolvency and Bankruptcy Code 2016 that excludes participation of owners who are not in willful default to be reviewed particularly for cases of default on account of force majeure, such as stranded
gas, thermal IPPs and other fuel feedstock linked projects
where state agencies have failed to fulfil contract obligations.
4. The present crop of risk taking entrepreneurs are best placed
to kick start the economy and need to be supported as long as
they are not determined to be wilful defaulters and malafide and
personally enriched by defaulting to the Banks.
5. All the above steps support strong credit growth for State
owned banks and moderate their NPA levels, thereby helping
them narrow the valuation gap with private sector banks. - Long
term median Price to Book of large corporate focused private
banks is over 2 times as compared to just ~0.6 times for large
PSU banks.6. More reasonable valuations should help
government recapitalise the Banks by making FPOs’ /QIPs/
Preferential offers to strengthen their CRAR. This can be
expected to contribute to disinvestment targets and bridge any
short term relaxation in the FRBM.
7. The combined impact of these steps should keep the
economy liquid without adding to inflation and restore the
economy quickly to its fair size and set the stage to capitalise
on the medium term opportunities to catapult at least 5 of our
banks into Global Fortune 500. Some relaxation’s on CSR for 2
to 3 years until stabilisation of core business would be
desirable.Medium Term:
8. The winds of change and shifting sands provide India the
golden opportunity to extend to the world a viable alternate and
an attractive 2nd source in the global supply chain.
9. We should swoop like an eagle and seize the moment with
alacrity & deftness by partnering countries, establishing  offshore competitive FDI & Industrial laws & regulations, liberal
policies , and the promise of long term continuity.
10. Indian annual merchandise imports totaled ~US $ 507 B in
FY19, comprising primarily Petroleum crude & products, Gems
& Jewelry, Electronics, Machinery, Chemicals & related
products, Minerals, Ores and Metals among others.
11. The focus for Indian manufacturing in the next 10/15 years
should be for substituting/reducing avoidable imports such as
Electronics, Machinery, Chemicals & related products etc. and
adding exports in areas where transitory competitive
disadvantage can be bridged by imaginative policy making and
tweaking key input costs like power and finance for designated
end use to achieve India’s strategic imperatives of a stable
currency by self-balancing (off- set) of imports and essential
exports.
12. The GOI should not hesitate in committing 1% of the GDP
for targeted outlays in catalysing these clusters. Adding
strategic depth in our bilateral engagement with Japan, UAE,
SINGAPORE, Iran, the U.S.A and even China ( in Electric
Vehicles) with a laser focus to drive outcomes on this front will
have the economy sprinting for years and create an exponential
burst of jobs for our young, enterprising and energetic Indians
and wbring regional and global talent to our shores not only in
reversal of the brain drain of 70s/80s/90s but to the golden era
of our legendary kings.

13. In addition, mega Multi billion imports for defence, nuclear,
aerospace , even power should necessarily include the
acquisition of critical technology and joint ventures with 51%
FDI should be liberally permitted.
14. These policy formulations can be formed and refined by
special economic task forces, market experts, distinguished
national and international policy makers with proven experience
in implementing bold reforms backed by hard data and driven
by key outcomes carrying the all strata of the society to deliver
a golden future of abundance for all.
Respectful regards
Sairam Mocherla ppl ppl