Posted in Corporate and Finance

Balance of Payments: The Weak Link Of Indian Economy

This article has been written by S. Mahavir Prasad Sahu. An aspiring CA and young IPCC student, Mahavir loves to discuss Tax and Finance.

Balance of Payment is one of the oldest and most important statistical statements for any Country. It is a Systematic record of all economic transaction between the resident of one country and the resident of the rest of the world in a year.

Balance Of Trade:  Balance of trade may be defined as the difference between the value of goods sold to foreigner by the residents and firms of the home country and the value of goods purchased by them from foreigners. If value of exports of goods is equal to the value of imports of goods, we say that there is a balance of trade deficit. But if the former exceeds the latter, i.e., if value of exports of goods is more than the value of imports of goods, we say there is surplus balance of trade.

Balance of Current Account:   Balance of current account is a broader concept than the balance of trade. It includes balance of services and balance of unilateral transfers (i.e., unrequited transfer) besides including balance of trade. Balance of service records all the services exported and imported by the country in a year. Unlike goods which are visible and tangible, services are invisible and are not tangible. The services transaction basically include : (i) Transportation, banking and insurance receipt and payments from and to the foreign countries, (ii) Tourism, travel services and tourist purchases of goods and services received from foreign visitor to home country and paid out in foreign country by home country citizens, (iii) Expense of  diplomatic and military personnel from overseas as well as receipts from similar personnel from overseas who are stationed in the home country, and (iv) interest, profits, dividends and royalties received and paid from and to the foreigners. Balance of service is the sum of all invisible service receipt and payments which could be zero, positive or negative. Balance of unrequited transfers includes all gifts, donation, grants and reparation, receipt and payments to foreign countries.

Balance of Payment on Capital Account:

Balance of payment on capital account includes balance of private direct investments, private portfolio investment and government loans to foreign governments. Balance of capital account basically deals with debts and claims of the country in question or we say it deals with borrowing or lending of the country in question.

Balance of Payments:

Overall balance of payment is the sum of balance of current account and balance of capital account. It includes all the international monetary transaction of the reporting country vis-a-vis the rest of the world. The balance of payments must always balance in a book keeping sense. This is because for any surplus (or deficit) in the overall balance of payments there must be a corresponding debit (or credit) entry in the net changes in external reserves. In other words, if there is a surplus it adds to external reserves of the country and if there is deficit, it reduces down the external reserves of the country.

Trends In Balance Of Payments Of India:

A country, like India, which is on the path of development generally experience a deficit in balance of payments situation. This is because such a country requires imported machines, technology and capital equipments in order to successfully launch and carry out the programme of industrialisation. Also, since initially it has only primary goods to offer as exports, it generally has an unfavourable balance of payments situation. As pace of development picks up it has to have ‘maintenance imports’ although it has now more sophisticated goods to offer for exports. But the situation remains the same i.e. deficit balance of payment.

This has exactly happened in India. Over the period of planning India’s balance of payment has generally remained unfavourable. However, deficit in balance of payments sharply increased after the fifth plan. During the whole of the fifth plan India experienced surplus in the balance of payment due to a sharp increase in the export surplus on account of invisible remittance.(Money sent by foreign worker to his home country) From 1979-80 onwards, India started experiencing very adverse balance of payments. This happened because growing trade deficits, which till then were offset by net receipts could not be made good by them.

The Sixth Plan characterise balance of payments position as ‘acute’.

The balance of payments continued to be under strain during seventh Plan. In early 1990-91, the already poor BOP position worsened because of Gulf War. In 1992-93, many important changes such as a new system of exchange rate management, liberalisation of import licensing and tariff reduction were introduced. India saw a remarkable turnaround from a foreign exchange constrained control regime to a more open, market driven and liberalised economy (Free Economy). The trade liberalisation and a shift to a market determined exchange rate regime have had a significant positive impact on the country’s BOP.

Recent Trend and Eleventh Plan:

We had a surplus for three successive years from 2001 to 2004. Buoyant invisible flows, particularly private transfer comprising remittance, along with software services exports, have been instrumental in creating sustaining surplus for India for the above period. However, since 2003-04 trade deficit has widened sharply, particularly in 2004-06, because of higher outgo on import of petroleum, oil and lubricants. As a result, current account surpluses have once again turned into deficit inspite of the fact that invisible flows have continued to swell. In the eleventh plan exports were projected to grow at about 20percent per year in US Dollar terms, the imports were projected to grow at 23 per cent, current account deficit could range between 1.2 per cent to 2per cent.

The 2008 Global finance crisis and subsequent slowdown in the world of economy has clearly demonstrated that tremor originating in one corner of the world can quickly reach the other parts among others via the trade channel. Mirroring the global trend, India’s exports which also had robust growth of 30.1 per cent in the five post crisis years(2009-10).

Foreign Exchange, Laws and Rights:

India’s foreign exchange reserves comprise exchange assets (FCA), gold, special drawing rights (SDRs) and reserve tranche position (RTP) in the International Monetary Fund(IMF). When there is volatility in exchange rate, the reserve bank of India (RBI) intervenes to smoothen it. This results in increase or decrease in the level of foreign exchange reserves depending upon the type of intervention. Exchange Market Intervention’ by RBI means the sale of rupee vis-a-vis on or more currencies. If there is too much demand for foreign currency (say Dollar), it will appreciate too much and Indian rupee will depreciate. At this point RBI intervenes by releasing the dollars (from its reserve) in the market to stabilize the exchange rate. If there is too less demand for foreign currency, it will depreciate and rupee will appreciate too much. At his point, the central bank will intervene by purchasing dollars from the market to stabilize the rate. 

Special drawing Rights:

The special drawing rights were created in 1969 by the IMF, to supplement a shortfall to preferred foreign exchange reserve assets, namely gold and the US Dollar. SDA, neither a currency, nor a claim on the IMF, Rather it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members, and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external position. The SDR today is redefined as a basket of currencies, consisting of the euro, Japanese Yen, pound sterling, and US Dollars. The Primary means of financing the international Monetary Fund is through members’ quotas. Each member of the IMF is assigned a quota, a part of which is payable in SDRs or specified usable currencies and part in the member’s own currency. The difference between a member’s quota and the IMFs holdings of its currency is a country’s Reserve Tranche Position (TRP). It is accounted among a country’s foreign exchange reserves.

Current Situation and Conclusion:

During Manmohan Singh’s regime as PM of India has seen both the fall from grace to absolute darkness to reaching a surplus balance of payments situation. For it the due credit has to go to Former PM Dr. Manmohan Singh who was one of the best economic brains of the country. The main reason behind the rise foreign trade in India is diversification of trade. Earlier, Europe and USA used to be main partners of India’s International trade. Now, Asia and ASEAN (Association of South East Asian Nations) have become India’s major trade partners. This has helped India weather the global crisis emanating from Europe and America.

India’s Balance of payments has been in check for a while but the ever changing trade scenario and IMF’s Ignorance to developing nation has India in a precarious situation. If India is to become a Developed nation one day, than the Balance of payment situation has to be absolute surplus (Surplus shouldn’t include foreign debt). But the ever fluctuating rupee and its fringe demand has left the most with one question, Will We be Able to Achieve an Absolute Surplus situation? Will we be able to achieve the goal in the next 5 years, or we still be waiting? Do let me know your thoughts.


 IMF Balance of Payments Manual, Chapter 2 “Overview of the Framework”, Paragraph 2.15 [1]


The November book bucket

court-room-genius                    Learning the law.jpg                     legal-eagles

Posted in Corporate and Finance, Critical Analysis, Recent Developments

First Impressions!

This article has been written by Amrit K.N. Pradhan. Amrit is a student at Rajiv Gandhi National University of Law, Patiala.

I was only able to open my brains out after getting on track to appear for my CLAT (2015) examinations. It involved multi-various way of preparations. Mine was largely based on getting hooked-on to The Hindu and two dozen of Non-fiction books. Getting into a National Law University was next step on the ladder.

Divulging views are like an alarm clock; they take you out of your ‘comfort zone’. At the same time, it also offers you the option of waking up to the world or setting it on snooze mode. Similar is the strands of views of people on the initiative of ‘Demonetization’ lead by PM Modi to dismiss Rs.500(introduced in 1997) and Rs. 1000 (introduced in 2000) as legal tenderIn its place, new form of Rs. 500 and Rs. 2000 notes will be issued as legal tender.

Initially, there will surely be hindrances in the economy in the ‘very short-term’ as duly acknowledged by the PM. But short-term pain will also result in long-term gain for the Indian economy.

The quirky press conference addressed by PM Modi was out-of-the-blue. It was ‘nothing like anything’ of the previous PR events organized under his helm at the Race Course Road. This major ‘surprise’ was, however, an impressive way of starting his helm at the newly named Lok Kalyan Marg.

It caught majority of public off-guard and set them on a whirlwind late-night emergency tour across the ATMs till late into the morning. It also set cat-among-the-pigeons of bullion traders in the informal market (similar would be the case of diamond traders in Surat who do their daily deals majorly in hard cash form.), informal securities market (dabba traders), our nearby kirana stores among others. The I-T Department was also quick on its feet by raiding these informal ‘black money’ handlers into the early hours of next morning (Nov.9).

This step surely will prima facie in the short-term take out wipe out ‘black-money’ of the economy for a temporary period. Other major benefits to be accrued of such a major ‘brave policy’ initiative is mentioned ahead.

Economic Front

The palpable change which has occurred with the change in regime at the Centre is in the ‘visibility quotient’ of Leader of the fastest major economy in the world. Remember the Madison Square Garden event, a first of many International diasporic events organized to strike a chord with the Indians residing abroad. Not only strike a chord, but also hope they would return to avail the ‘transforming era’ in the country and ultimately serve their motherland.

This ‘Demonetisation’ surprise was his eccentric way of trying to turn black money into white. Not only black money into white, to help the Indian economy reach its full potential when private investment is at an all-time low since the 1991 Reforms. The Government however commendably has plugged in this gap by increasing its role in the market by way of public investment.

The inability of banks to advance loans to the private sector due to previous advances turning bad (known as ‘Non-Profitable Assets.) has been a major clog in attracting private investment.

Public investment, however, has a limited scope in the future. Limited scope due to the Centre’s aim of maintaining a 3 per cent Current Account Deficit (CAD = value of Exports – value of Imports into the country.) in near future. The latest statistics of the Reserve Bank of India (RBI) show a positive picture and room for the government to pump in more investment in the economy. In April-June quarter of FY17, India’s CAD was0.1 per cent in deficitcompared to 1.2 per cent in the last quarter of FY16.

Cashless Economy

Under the previous regime of RBI commander-in-chief Dr. Raghuram Rajan the policy of issuing license to payment banks was introduced. It allows users to deposit up to Rs. 1 lac in these accounts and earn interest. It however, does not allow these ‘payment banks’ to forward loans to customers.

This step was a complementary step in equation with Jan Dhan Yojana of the Central Government which allowed opening bank accounts for free for rural consumers.

‘Creative Destruction’ (Regards – Schumpeter)

The likes of PayTM, Mobikwik, Freecharge (now-owned by e-commerce major Snapdeal) will be delighted with the step (first signs visible of their delight when one of these companies acknowledged the PM through newspaper adverts). This ‘brave act’ by Modi will mean the ‘creative destruction’ of black money will be achieved (even if marginally) through the innovative e-wallets of various payment banks, albeit in the short-term. But surely setting up the platform to eradicate in the long-term.

It is calculated among anonymous sources that around Rs. 30,000 crores of daily trade occur in the economy in form of ‘black money’. In the long-term, it will need other transformations in the economy in form of easing accounting standards, tax structure (GST will surely help.) et al.

A good start, but a long way to go. (Meanwhile, Snapdeal has come up with an innovative way around COD or cash-on delivery users by offering ‘Wallet on Delivery’, wherein those customers availing this facility will pay through their wallet on delivery of their consignment.)


The November book bucket

court-room-genius                    Learning the law.jpg                     legal-eagles

Posted in Corporate and Finance, Uncategorized

GST on the way, Labor Reforms on the Anvil!

This article has been written by Amrit K.N. Pradhan. Amrit is a student at Rajiv Gandhi National University of Law, Patiala.

“Precaution is better than cure” – Johann Wolfgang von Goethe.

I have probably heard this fable more than ever in my lifetime, it looks like the trend will continue. It certainly puts my parents and my sister on the brink. I apologise to them.

Changing tracks…

Since the inception of NDA-II under the reigns of PM Modi the business environment has certainly made headway. The World Bank Group’s “Ease of doing Business” (an index which measures the regulations and protections offered by a country.)deserves a healthy share of the pie. The fable has been so much in vogue that now a provincial version of it has been ‘manufactured’.

The first major instance, where NDA-II tried to make its mark in promoting a conducive business environment was by introducing The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. The bill created five special categories which were exempted from taking consent from 80% of land owners (70% in case of PPP.), a tumultuous process. They were defence, rural infrastructure, affordable housing, industrial corridors and infrastructure projects including public private partnerships where the government is the owner of the land.

The process was a certain hindrance in fast-tracking business investments and projects in the country. The Government in power passed the muster easily in Lok Sabha but same was not the case in the Rajya Sabha, where it did not have a majority like it had in Lok Sabha. It passed ordinances under Article 123 of the Indian Constitution several no. of times, in the meantime they tried to garner the required votes to pass the bill. Unfortunately for Indian economy and business environment, the time gained through promulgation of ordinances garnered zero returns.

Remember, your debut class in economics where one of the first things you learned or noticed that Land, Labour and Capital are the basic factors of production. So, NDA-II also noticed the basic need to make the land acquisition process easier and quicker to have an able base to setup businesses in the country and take the country on the path of “Development and Job Creation” (a plank on which PM Modi won the Elections 2014.). But, it failed.

Next basic thing is Labour. You can criticize them for skipping it prima facie. For a moment, if I tell you it was a wise political move to not to escape the bad impression in the eyes of the general public which LARR Bill had created and jump on easing the capital flow. Then, I am sure the criticism would be repudiated.

The Government eased the capital flows by making it easier for sectoral firms to utilize and attract foreign investment through FDI. SEBI chipped in by easing the regulation environment for FIIs or Foreign Institutional Investors. GST was part of easing the Capital flow, it faced hurdles but ultimately it passed the muster. Fingers crossed! by April 1, 2017 hopefully we will contribute to the governance process by paying our fair share legally under the GST or Goods and Services Tax.

Looks like the script of ‘one single nation, one single tax’ will be played around with to account for four slabs of 6%, 12%, 18% and 26%. I am on the cusp of reading and learning through Emeritus Fellow of Merton College, Oxford economist Vijay Joshi’s latest writing, India’s Long Road – The Search for Prosperity. It has gone quarter of way in appreciating the current reign of PM Modi. However, it also points out frailties in Labour, divestment of governmental stakes in PSUs, vicious tax evasion and India’s reticence in joining the free-trade agreements currently being negotiated throughout the world are some of the lucid pointers which needs quick appraisal for the current government to grow at a rate near to 8% to fulfil the promises of “Economic Development and Job creation”.

First of those suggested by Vijay Joshi, who has been the Special Advisor to Ministry of Finance as well as Governor, Reserve Bank of India is planning to be dealt with by Team Modi & Co. The work had begun when the current government took over in May, 2014 to amalgamate and cull down the various Acts into as few and updated as possible. As per sources, they have been trimmed into four Labour Codes underlining Labour, Industrial Relations, Social Security plus Industrial and Safety Welfare.

The Labour Code underwrites Minimum Wage Act, 1948 as the parameter for wages. The Industrial Code restricts formation of a trade union. Social Security amalgamates 6 acts into one code, Industrial Safety and Welfare does the same with three underlying acts.

This should up the ante of India in World Bank’s Ease of Doing Business Index 2017. Rankings apart, on the ground applicability of the law will be crucial to ‘Ease of Doing Business’.


Posted in Corporate and Finance, Others

Concocting a Bad Bank

This article has been written by Amrit K.N. Pradhan. Amrit is a student at Rajiv Gandhi National University of Law, Patiala.



“The More you meander around with things, the more they stay the same”.

It is that time of year again when you are less than a week away from Diwali break. The anxiety levels are at the optimum. There are though things to hold on and calm you down, especially when you are in the hot seat doing what you like.

However, situation is not such rosy in the Mint Street. Even after the Asset Quality Review (AQR) under the aegis of RBI which meant classifying non-payable interest payments into the head under non-profitable assets, balance sheets are still in a bottleneck. October is a busy period not only for business houses but also for stock traders who have their hands full with a a barrage of information from M&A’s to Sales stats etc. The most important however is the financial results of the companies for the just bypassed Q2. Analysts with their hawk-eyes are on their toes to pounce on looking for that extra paisa here and there.

If you ask them about the sectors to keep an eye on for long positions – pharmaceuticals, automobiles and FMCG would do the rounds. On the contrary, if you ask them for short positions –  ITES, banking (especially public sector banks or PSBs) and metals would make up the list. Out of the six sectors banking is what is the oxygen for the other five. And public sectors banks (by market share) contribute more than 70% to the Indian economy.

The problem of PSBs non-performing assets (NPA), far from easing, seems to be getting worse. In the last financial year (2015-16 or FY 16) their gross NPA rose from 9.5% from 5% from FY15. Out of the total Gross NPA (approx. 5 lakh crore) in the banking sector the contribution of PSBs is 88%.

Bank Board Bureau (BBB)

Gross Capital Formation (GCF) refers to the net increase in physical assets (investment minus disposals) within the measurement period. As per the latest figures (as of October 4, 2017) it is 28.3 %, the lowest in the last decade. It hit the highs of 35 % at its peak in 2000. Whatever sub-8% GDP growth India has achieved is due to intervention of the fiscal policy of the Government.

The Government has its hand tied to extend its fiscal intervention due to its aim of hitting the mark of 3% CAD or Current Account Deficit by 2017.

To deal with the situation the Ministry of Finance has already recapitalised banks and aims to influx more of it in the future with the backing of Union Minister of Finance Shri. Arun Jaitley. To deal with situation holistically a BBB has been setup under the hawk-eye of the former CAG Shri. Vinod Rai.

It aims to oversee professional appointment into the boards of the PSBs, check the application of best practices and create a platform wherein such a situation of ‘Trickle Down Credit Growth’ does not occur even after RBI has done its bit for improving the credit scenario in the country.

One of the firsts’ in restructuring the balance sheets of the banks was whether to create a Bad Bank to house these ‘Non-Profitable Assets’ in an independent structure. It would mean wiping of the clog from the balance sheets of these PSBs. However, the repudiation for creating such a ‘bad bank’ is there more than a dozen of such Asset Reconstruction Companies. Creating another under the weather may create an environment for a race to the bottom.

A recent example of such event would be the creation of such a bad bank in ‘sick’ Italy where such a bad bank’s resources were exhausted in recapitalising just one bank i.e. Banca Monte deiPaschi di Siena Spa.

However, the solution to such a problem has already been Made in India. India’s largest bank (as per market share) State Bank of India is on the heels of merging its sister banks to hold it in good stead in terms of balance sheets and to rise higher in the global league tables. This merger is very objective in nature as a smaller bank has extensive local knowledge and functional efficiency. Creation of a centralised organisation would make the decision-making process and the lending process even slower.

The key to solving the bleeding of banks would be to bring in best professional practices and let them compete with the private banks in the sector by divestment of government stakes in these PSBs (For eg. – Check the recently released Financial Results of RBL Bank). Making half-hearted effort in solving the problem like temporarily creating a bypass for reducing the logjam would be nothing but beating around the bush. That is the least Indian economy needs to continue grow at par-8% and build a good base for Make in India.

 Just glance an eye for inspiration on the recent leadership and management skills of Shri. AshwaniLohani, MD of Air India which conjured up an Operating Profit of Rs. 105 crores in FY16 (you shouldn’t rule out thought the effect of culled down global crude oil prices).

Posted in Corporate and Finance, Others

Crushing Unethical Uprisings and how: The Tide of Corporate Governance

This article has been written by Abhipsa Upasana Dash. Abhipsa is a third-year student at Symbiosis Law School, Noida.

The elucidation of the very term; Corporate Governance varies widely. However, they can be demarcated into two categories. The first set defines it as a collaboration of behavioural patterns, that is, the actual behaviour of organisations in terms of performance, efficiency, growth, financial structure, manipulation of shareholders and other stake holders. The second set defines it as a standardized scaffold for governance laying down rules under which the firms operate with respect to external influences such as the legal system, the judicial system, financial and factor (man power) markets.Hence, a comprehensive meaning of corporate governance suggests that it is “the complex set of constraints that shape ex post bargaining over the quasi rents generated by the firm”[1]. Elaborating on that, CG is the complex set of constraints that determine quasi-rents (profits) generated by the firm in the course of relationships and shape ex post bargaining over them. This definition is applied to both the determination of value-addition by firms and the allocation or sharing of such value among stakeholders that have legitimate relationships with the firm.[2]

The rules and codes of Corporate Governance is an important spoke in the wheel of competitive performance, especially in developing nations. It is a basic roadmap which provides the base for fundamental interaction between companies and their capital suppliers. With the onset of globalisation and technological advancement, companies and entrepreneurs are being exposed to more efficient and full-fledged capital raising vehicles that ever thought of. Greater competition for capital eventuate greater pressure for corporate economic performance and hence bring consequential pressure on the enduring relationships with employees. Contrastively, globalisation ensures that capital suppliers are exploring new prospects which in turn can meliorate their returns. So, better corporate governance standards keep the corporations in a good light, thus helping them attract capital suppliers from well governed firms.[3]

The emergence of corporate governance can be marked with the publication of Jensen and Meckling’s article published in 1976, which triggered plethora of empirical and theoretical research on the subject. During the late 90’s, the research on the subject was primarily targeted on US corporations. As time went on, similar work had been construed in other developed nations such as Japan, Germany, and the UK. Hence cometh an era of finding out the impact of Corporate Governance on the emerging markets.

Thus, the subject of Corporate Governance in India has been based precisely upon the Anglo-Indian exposure, literature and practice. The corporate sector regulators of India have been quick to assimilate and apply international Corporate Governance practices into the day to day work environment of the corporations. Given the track trudged upon by the Indian Firms post-independence along with the roles Foreign Investments have played therein, the issues and problems of Corporate Governance in India are contrastive to those found elsewhere.[4] Adopting international CG practices without suitable modification does not, therefore, help to address or resolve specific governance issues plaguing the behaviour of Indian firms. Issues such as the effect of ownership concentration on shareholder rights, the role of relationship-based activity between banks and non-bank corporations, its impact on creditor participation in corporate governance, the prevalence of insiders and promoters, the effect of social and corporate culture on disclosure, transparency and enforcement, etc., cannot be resolved simply by transplanting international CG practices.

The rules and codes of Corporate Governance is an important spoke in the wheel of competitive performance, especially in developing nations. It is a basic roadmap which provides the base for fundamental interaction between companies and their capital suppliers. With the onset of globalisation and technological advancement, companies and entrepreneurs are being exposed to more efficient and full-fledged capital raising vehicles that ever thought of. Greater competition for capital eventuate greater pressure for corporate economic performance and hence bring consequential pressure on the enduring relationships with employees. Contrastively, globalisation ensures that capital suppliers are exploring new prospects which in turn can meliorate their returns. So, better corporate governance standards keep the corporations in a good light, thus helping them attract capital suppliers from well governed firms.[5]

Irrespective of uneven starting points, convergence of corporate governance regimes has become an emerging trend in recent years. This surge can be due to firms adapting and adjusting as a result of the increasing globalisation and integration of capital markets, ever increasing contact of policy-makers and regional and global policy, and its intense impact on the minds of leaders initiating change. The increased adoption of such Anglo-American model in the developing countries can be reasoned for a) the historical connection of the countries since colonial era and b) the apparently unsuccessful results of previous interventionist regimes associated with corporate governance constituents.

In reality, the rules-on-books regarding CG appear to be converging in response to the pressures of global competition; but convergence of actual CG practices is much slower in materialising. Nevertheless, especially to transnationals and multinationals, a set of universal guiding principles are relevant. In terms of the functioning of transnationals the importance of regulatory convergence becomes critical, when countries have different company codes, capital market requirements and enforcement capabilities which transnationals can use to their advantage to arbitrage. The first effort to offer a global set of principles was done by the OECD19 by attempting to harmonise practices across its 29 country members, ranging from the US to South Korea.[6]In response to various corporate failures and systemic crises, CG practices the world over have evolved over time and are still evolving. The structural and process elements of governancehas been the focus to date.Butcompanies need to view this issue as a strategic challenge instead of simply responding to recurring imposition of new requirements to achieve truly effective corporate governance. The process of adapting, refining and adjusting corporate governance practices is a never ending process. Corporate governance should therefore be considered as “work in progress” and its practices should be reviewed systematically and periodically.

[1]Zingales Luigi, ‘Corporate Governance’, The New Palgrave Dictionary of Economics and the Law, Macmillan, London, Corporate Governance (1998),

[2]StijnClaessens, Corporate Governance and Development (THE WORLD BANK 2003), available at

[3] ibid

[4]Lalita S. Som, Corporate Governance Codes in India(2016),

[5] ibid