I want to talk about three things today. HDFC is raising capital. I also want to talk about the plan of government to disinvest in ITC and access bank. And also there is a reported that government is going to pledge it's taken public sector banks to raise money.
Today morning open news that the government is desperate to raise money. So it's going to raise 22,000 crores. Basically, it's taking ITC and that's us banks who Alessi and other mutual funds through a bubble tea. Both access bank and ITC fell by 7%. Access bank has since recovered. ITC is yet to recover.
This is like selling Family Jewels who meet current expenses. There are several ways innovative ways by which government can raise money once you sell these scrubs, these are not going to come back and you're not going to waste money the government needs several lakh crores today and selling stock of 22,000 crores is also is going to be a very big not going to make any difference to their fundraising plan.
There is also another having plan of pledging on public sector stocks with the Reserve Bank to raise money. That is another far fetched idea. Along with this news is the news that HDFC is going to raise 8000 crores by making offer an offer of sale says TTIP are given rights issue stfc feels that the kind of current markets are very tough and wants to bolster his capital.
Already the lanes are announced mega rights issue kotak Mahindra put out an issue for 7500 course HDFC is the third one to put 1000 crows, banks and lending institutions are flush with cash and not lending. At the same time, they are also raising money from the market to suck out capital out of the market.
There is also a news item in the business center, which says that credit to do bonds, cash and credit to bonds banks and commercial papers has dropped 64% in the last month.
All this indicates that there is going to be a severe cash crunch and credit crunch in the market. Like I said several times before, the only person who can solve this problem is a central government.
He has to catch the bull by the horns are not worry about rating agencies and allow the fiscal go out of the go out of out of control. As long as you are borrowing in your own currency, there is no pressure for you to lend like this.
The rupee will depreciate making your exports very complicated if rating agency marking junk and there is a moment Law products foreign investment, it should embrace it, we have $470 billion in foreign exchange, we can pay out hundred hundred and $50.
Finally the flow will hold us the government realizes this and decides to solve the problem.
By taking the risk on its balance sheet. Things will go so bad that the government will finally be forced to do it. It is better the government takes the global risk upfront and still destroys confidence in the economy. rather wait for things to go into irreversibly bad and then try to get into the market of the form things.
What this shows is, if blue chip names like relay in Scotland and HDFC are going as going to stand in the market to raise money, then there is very little hope for the small game.
It is the imperative duty of the government to protect the small guy and make sure he survives because 70% of India is employed by the SME and msme sector.
If that goes for a toss, all our plans will go to costs for the next two, three years. So instead of thinking small and hatching and add beans, creams, the garment, embrace the situation, print and borrow heavily and spend at least 5% of GDP to add stimulus to help the government to help the economy recover. Thank you very much.
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