How long should we Nagas live poor in a rich State? Having been blessed with so much natural resources, we are unable to tap it effectively for our state’s economic growth. How long should our Nagas go with a begging bowl to the centre for all our needs when we have enough resources? Why do we choose to be beggar when we have potentials to have plenty? The choices are ours alone. The contentions put forth by NBA (Nagaland Bar Association) against implementation of SARFAESI Act 2002 in Nagaland needs serious deliberation on the context of state’s economic condition. Under these provisions, the banks may issue notices in writing to the defaulting borrower only after the account had been classified Non-Performing Assets where the borrower defaults payment for 90 days and only after which the borrower is served 60 days notice to discharge the liabilities. The remedy of appeal to Debt Recovery Tribunal is available under section 17 and 18 of the Act, against notice for possession and enforcement of security interest.
Every organization has its mission and vision, and they know best their association’s interest for members and the state. Whilst we respect NBA for the yeoman services made to our society, it is equally important to uplift the professions of businesses and entrepreneurs who are solely responsible for job creation while contributing to the economy of the state. Whatever the Business Association of Nagas (BAN) accentuates here is purely on merit and on personal experiences, which shall always be seen from the prism of uplifting Naga businesses towards economic freedom. For much too long, due to the unprecedented neglect of Naga businesses by the successive governments and Banks and financial institutions (BFIs), the state has been reeling under economic stress. Growth in workforce and growth in the productivity of the workforce are two main sources of economic growth and this economic growth only comes from increasing the quality and quantity of the factors of production which consist of land, labour, capital and entrepreneurship and in the absence of these, the economy crumbles. While we create employment even under very poor and stressed infrastructure and rampant illegal taxation, there are factors that are working to cut our supply lifeline of finance. BAN cannot afford to remain dormant and we can’t remain silent when our economic condition are been crumbling to rock bottom.
The main four engines to keep the economy going are consumption, investments, exports, and the government. Of these, the latter’s contribution has fiscal constraints. Finance is the main fuel of every business, no matter what size. The influx of cash is used for multiple purposes. It could range from enhancing working capital, expansion, purchasing new assets, replenishing stock, hiring more staff or refinancing to pay off an existing debt. The consequences of not having enough capital can be dire for businesses looking to grow and expand. Hence enterprises opt for external funding to incorporate new technology and purchase assets like innovative machinery to upgrade their facilities, this increases efficiency and production capacity which helps in fulfilling expansion plans. Access to finance promotes the entry of new firms and innovative activities, thereby stimulating competition and efficiency.
Entrepreneurs are always looking for opportunities to spread out, flourish and take our business to the next level. Capital funding can be used to develop, test and launch new products in the market. With growth and expansion, it’s inevitable that businesses want to enter a niche market or target a new clientele base. The initiative to explore fresh avenues involves in-depth research, well-rounded marketing strategies, promotional campaigns, recruitment of skilled and talented staff, setting up of retail outlets among other things. And yes, all this requires a tidy sum of investment. To keep the ship afloat and ensure that all the operations are running smoothly, businesses need to have enough working capital.
Enterprises need finance to start up a business, run the business and expand the business but unfortunately many businesses, especially small establishments don’t have the resources to shoulder the expense. The consequence of not receiving a business loan for a firm is quite drastic. Without banks giving out any personal loans, business loans and financial assistance to their borrowers, the amount of money put into investments diminishes and the financial markets underperform. There is also cyclical effect. When investment slows down, economic growth slows as a consequence and customer demand is low as items become difficult to afford and economy suffers. As more people become unemployed, consumer demand drops even further. Lowering demand leads to industries requiring fewer investments to fuel the production of their goods and services. Hence, without finance there is no business and without business the economy is dead.
Banks’ failure to finance businesses causes two types of unemployment. The unemployment that have direct result of firms not being able to afford to pay more employees without receiving the requisite business loans or personal loans. Following this is a negative feedback loop that results in low demand from the newly unemployed consumers which leads to lower production from enterprises thereby decreasing capacity utilization that results in demand-deficient unemployment. Demand-deficient unemployment is when an enterprise has to let go of its current employees or stop employing new individuals as demand for their product is low. In the first case, demand may still exist but the company does not have capital from the bank to afford extra employees. In the second case, there is no demand and hence, sales are low and money spent on production is wasted. To cut costs the enterprise drops its employee count and stops hiring new people. In conclusion, bank’s failure to finance enterprises has a significant ripple effect on a nation’s economy. To keep the ship afloat and ensure that all the operations are running smoothly, businesses therefore need to have enough working capital.
In a situation where Government doesn’t have enough revenue to support entrepreneurs and businesses and banks are not extending loan because of non-implementation of SARFAESI Act, should our state continue to reel under salaried economy of government servant alone? What about our economy? Are we not indulging in systematically finishing the present and future entrepreneurs and businesses in Nagaland by trying to deny the main lifeline for businesses – Which is FINANCE. Isn’t it important to create the right infrastructure and atmosphere for the younger generation to proudly contribute in building a robust economy of the state through affordable finances? We have a classic case in the parlance of losing out on economic development, where the so called natural resources like Petroleum and natural gas which Nagaland is perceived to be highly prospective fails to kick start exploration and production and in the process we are losing out thousands of crores of rupees annually, while our State economy is sulking and Infrastructure is in pathetic condition. Just because we are too focused in Article 371(A), we seldom missed out the larger picture which causes enormous losses to the state and we remain as what we are today with a free rider mentality. The awareness call given by Naga officials of OIL PSU dated 1st October 2021 in daily paper is absolutely right when they question whether we are going to miss the bus to economic development. While we have already missed the bus in oil exploration, yet we will continue to call on Government for taking up in seriousness for the cause of the present and future generation. We also cannot afford to miss the bus on the SARFAESI ACT and will give every effort in supporting the State Government in implementing the SARFAESI ACT 2002 in sync with provision of Article 371A(1)(a)(iv)
L Mongkum Jamir, President BAN
Dr. Yan Murry, GS, BAN
The Business Association of Nagas (BAN) is an association working for the benefit of the Naga business community. Find out more at www.baofnagas.com