Appointment of a CEO and a Chief Accountant National Assets can make India Tax free and Debt free country by 2029

Open Letter to legendary Prime Minister of India

Respected Sir,

You are a specially gifted blessed pious soul and a selfless Karmyogi. What you have given to people of India in last 20 years as Chief Minister of Gujarat and in your first term as Prime Minister of India has already turned the table. The country is no more a Loot Raj, it has been transformed in to a Welfare State. You have proved to be a Messiah for the down trodden who could have never ever imagined possession of a Toilet block in house, Gas, Electric, a Pucca House, good education for their children, costly treatment for the poor and many - many things more. Through your Statesmanship and implementation of a Win-Win-Win policy of ‘Sabka Saath Sabka Vikas’ in letter and spirit, India has established friendly relations throughout the world even with adversary countries and established its leadership. The enemies within and without are learning a lesson and have realized ‘Ab Aur Nahi Chalega’. People of India have recognized your service and spirit for them and have rewarded you for it. Your landslide victory is a testimony to that. Please continue with it in your second stint but sir you are made for much more.

Sir, in your second stint as Prime Minister you can now give such an unimaginable gift to humanity that shall make you immortal; you shall always be remembered in history. And that GIFT is freeing everybody from the agony of parting with virtually half of their hard earned income in taxes and the tyranny of tax regime – a totally Tax-free arena. It shall be ‘MODINOMICS’ replacing the 90 year old Keynesian theory.  Sir, the backbone of the Modinomics is your own theory ‘Government has no Business to be in Business’. As a CEO I can clearly see that if this theory is implemented in letter and spirit the government can generate so much revenue from its Assets that there shall be no need to extract tax money from the people. And ‘Abki Baar Tax Free Sarkar’ can easily be your genuine offer for 2024 to people of India and that shall set a yard stick for the entire world to achieve.

Taxes are the biggest charge and agony in everybody’s life – be he the rich or the poor. I can’t forget the pain I saw in the eyes of my Doctor when she bursted and exclaimed that ‘look, Agarwalji, we earn just 1% as Incentive after working from morning till night and even from that meager amount GST is deducted’!  As for rich, tax is the hottest subject for discussion in all their gatherings and thousands are losing sleep over some amount they deposited offshore to save some tax amount.  

In Tax free economy there shall be no black money – all money will be White and Glittering because money is same, it becomes Black only if tax is not paid on it. No requirement of tax payment, so no tyrannical agencies like ED, CBI, Income Tax Department etc.

 Sir, you have promised doubling farmer’s income by 2022. By removing taxes you shall double EVERYONE’s income on its implementation and that shall be equal to or more than depositing money in everyone’s bank account. In a Tax-free regime capital shall pour in India from its own citizens who have stashed it overseas as well as from entrepreneurs of the world.  India already has plenty of natural resources, people friendly climate and a bountiful of intelligent man- power. What it needs for growth is Capital.  With capital flowing in to India from all corners of world India shall become center of world’s manufacturing and its supply hub.    

Sir, I do not claim any expertise for achieving this noble goal. You have a huge think tank of intellectuals who can chart a clear implementable Road map for it. I am only being a Thought Provoker in this direction and as a CEO I explain below an action plan for it.

Your vision of ‘Government has no Business to be in Business’ means that existing commercial ventures of Government are to be charted out to Private Sector. Government should receive a commensurate income from them regularly to meet its operating cost. To this I add one more very valuable important  factor – income from all kinds of national assets the value of which is not even known what to say earning from them. I have already given you an example of it in my letter dated 11.6.2019 about huge earning potential from Forests and I shall present earning potential of all other Ministries one by one in coming period.   

Government has a huge stock of various kinds of assets which are not generating due revenue and are being abused by unscrupulous people in connivance with or without government officials like illegal mining. Either the Government is not aware of it or turning a blind eye. So much so this important source of revenue is never discussed in budget presentation. Presently a meager amount in the range of Rs 2 to 3 lakh crore is being earned from national assets. Ignominiously it is termed as ‘Non-Tax Revenue’ in the Budget.

Income from National Assets called Non-tax revenue in last three years -

	2017-2018  वास्तविक Actuals	2018-2019 बजट अनुमान Budget Estimates	2018-2019 संशोधित अनुमान Revised Estimates	2019-2020 बजट अनुमान Budget Estimates
1.Gross Tax Revenue	1919009	2271242	2248175	2552131
2.Non-Tax Revenue comprising of:	192744	245089	245276	272647
a)    Interest receipts	13574	15162	12047	12911
b)  Dividends and Profits	91360	107312	119265	136071
b)    External Grants	3582	2667	1270	1006

d) Other Non Tax Revenue*	82338	117886	110619	120509
e) Receipts of Union Territories	1890	2062	2076	2149

 *Other non- tax revenue include recovery from disinvestment which really means from selling house silver itself and not income from it.  

My research says this amount can be multiplied many times. This I say after studying earning potential of our various Ministries. In my second letter to you sir, dated 11 June 2019 I have given you my study about Ministry of Forest. The study shows Forest Ministry, presently depending on tax revenue, can in fact earn a huge income not only to meet its own operational cost but provide a good quantum of support to the budget.

Sir, to bring such transformation two new Positions shall have to be created and filled up with most competent persons. These are- 

First and foremost is appointment of a top of the line CEO from commercial arena. CEOs are a different class of people. They are trained to EARN commensurate income from the Resources given to them like a Project. They have a different mindset. Their job cannot be performed by Administrative experts or even Economists.  You have personal rapport with most of the top CEOs of India and of the world and that shall come handy to select a proper competent result oriented person. Their job profile and quality is explained in Annexure ‘A’.

Secondly, a very competent Chartered Accountant shall need to be appointed. He shall enlist, evaluate and prepare a Balance Sheet of all Assets and Liabilities of the country. His role profile and methodology is explained in Annexure ‘B’

Sir, give it a serious thought. The country is missing a great wealth creating opportunity. Government shall get a huge amount of income from its Assets and people shall not have to part with their hard earned income by way of taxes.    

Sir क्योंकि आप हैं तो मुमकिन है।

Job Profile of the CEO – Chief Executive Officer - National Assets

Ø  The position of CEO National Assets is conceived to be similar to National Security Advisor (NSA). He shall enjoy the status of a Cabinet Minister. He shall report directly to the Prime Minister. He may be designated as NAA –National Assets Advisor or similar.

Ø  The CEO shall be tasked to generate optimum revenue from the national assets and resources.

Ø  His responsibilities shall include -

Ø  Make PM’s philosophy of ‘Government has no business to be in business’ a success in all possible ways like Reengineering all new development plans in a manner that they are executed by private sector while government earns a regular income from them in the form of equity, lease rent, interest, etc.

Ø  Making attractive business plans and attract the private sector from whole world to take over existing government enterprises – profit making, as well as loss making in a manner that government earns regular income from them.

Ø  Enlisting and monetizing all national assets.  Countries world over do not have a stock list of all national assets and value thereof. I have been able to develop a Methodology for it for the first time in world. It is briefly outlined in Annexure ‘B’. Detailed Methodology shall be provided to Government on their asking.

Ø  The NAA shall be responsible to look after growth, safety, accounting, security, proper administration, generation of commensurate revenue from all existing and new National Assets belonging to every Ministry of Union Government as well as of all States of India.

Ø  The NAA shall be provided services of a ‘National Chief Accountant Assets’, who shall be a Chartered Accountant and whose role profile is described in Annexure ‘B’ for proper accounting of National Assets.

Ø   The NAA shall study what Goods and Services are produced by all Ministries of the National and State Governments and a prepare plan to generate commensurate revenue from them. His objective shall be to make every Ministry self supporting to meet its operating cost and development plans and stop using tax money.  Even for Defence Ministry and Home Ministry he shall study what assets the Ministries possesses that can generate revenue. The effort shall be that every Ministry not only meets its own revenue needs but also contributes to exchequer to pay off national debt.

Ø  The country should come out of Deficit Financing rut and produce Surplus every year.

Ø  The NAA shall do financial engineering of new projects in a manner that private sector executes them with their own finances but Central Government gains permanent income from such assets by way of Equity and Lease Rent etc.    

Qualities of a CEO that differentiates him from others

The CEO is all the time 365 x 24/7, is under pressure to EARN and give commensurate return on the value of resources provided to him. Not only that, the return should increase every subsequent year. The moment his earning starts stagnating he is removed. A CEO’s job is most unsecured job.

Annexure ‘B’

Chief Accountant National Assets,

Job Profile of the Chief Accountant National Assets (CAA)

The CAA shall be a highly experienced Chartered Accountant with deep experience of making Balance Sheets of large Corporations having several affiliates (and not from Taxation side). He shall report to the NAA.  He shall compute and present following reports :-

ü  An exhaustive list of all National Assets both in Public and Private domain in quantity and value location wise every year.

ü  Annual Balance Sheets of every State and Union of India enlisting all their assets and liabilities in the standard format of Balance Sheet as prescribed by Company Law Board for listed enterprises.

ü  Shall present financial profile of every Ministry of Union Government and State Governments giving full detail of all assets possessed by them..

ü   Financial profile of every village, town, city & Metro enlisting and evaluating their all assets and civic amenities

The research made by me shall enable preparing all these critical and revealing reports. I have made a thorough research in working of Government during last several years and have compiled a Research paper that runs in to some 500 pages. I call my research ‘Monetizing Nations’. Basic fundamentals of this research are given below. Full research paper can be presented to the Government on their asking.

All the above data shall be uploaded on a website and shall be available for public viewing at all times.

In my research I found that government has a very systematic data base on all subjects.  All revenue and expenditure is well recorded. The country has been subdivided in to well-defined Geographical Entities. Detailed information including area maps, geographical attributes, history, geographical features, Administrators, natural resources and national assets, civic amenities, economic activities, is available for every Geographical Entity in the DCHB brought out by Census of India every teen years. There are 6.58 lakh geographical entities in the country from big to small as per 2011 census. However, there are no documents or reports that give financial value of these assets.

 On financial matters I found country produces annual budget that gives account of revenue received, where it was spent in past two years and what is the estimated revenue and expenditure plan for the ensuing year. The country also produces a GDP statement that gives monetary value of all goods and services produced in the country – both in government and private sector. The data provided is authentic, reliable and unbiased.

However, I was perplexed to find that the government does not produce a Balance Sheet which is a statement of All Assets and Liabilities of the enterprise. In business environment it is unthinkable to operate an enterprise without this document.  In fact, Government of India has prescribed a standard format of Balance Sheet for commercial enterprises but Government itself does not produce one.

 On deeper study I found that governments world over have not been able to produce this document  due to various complexities like-

1.    The country is spread over a vast area – India is spread over 32.86 lakh Sq km, having various kinds of features - like vast cities to small hamlets, mountains, hills, ravines, rivers, water bodies, forests, sea coast, etc.

2.    The country is bestowed with a rich bank of natural resources like land, water, air, sunlight, airwaves, minerals, human resources, wild life, flora and fauna, forests etc that have not been valued per unit of quantity.

It appears these impediments have deterred countries to produce national balance sheet.  On deep study of data available and on the strength of my lifetime experience I have been able to devise a methodology that shall enable systematic production of –

i)              Comprehensive Profile Statements of every geographical entity enlisting all vital features of the entity and value of various kinds of assets and resources available therein, both in public and private domain, in quantity that can be converted in to money terms by multiplying with unit cost of the asset.

ii)             Balance sheet of every State of India, Central Government and a consolidated Balance Sheet of the nation as a whole.

iii)            This document shall be published annually. It shall be on internet to be available globally to everyone who have need and can benefit from this information.

iv)           This information shall open up flood gates for qualitative and quantitative development of every geographical entity of the country. In fact, and most importantly, while India resides in its urban area spread over just 3% of its land area with only 30% population, Bharat resides in 97% of the land area and nourishes 70% of its population.

v)            This 70% population contributes only about 17% to its GDP while 30% urban population enjoys major chunk of 83% of GDP. Thus rural India is perennially poor and shall continue to remain so unless some revolutionary steps are taken.

vi)           The Comprehensive Profile Statements for each of these villages shall make available vital data that shall enable Planners, its residents and all stake holders to think how their income can be increased making full utilization of valuable natural resources and assets existing there.

vii)          Annual Balance Sheets shall establish credit worthiness of States of India and the country as a whole. An authentic Assets report shall enable  them to raise capital for growth and development. India is short of capital only while other factors of production - men and material are available in plenty and at economical cost.  .

Balance Sheet presents in an authentic manner real Net Worth of an Enterprise.  Lenders rely on this document for lending money to an enterprise. All countries run on loans – huge loans.

National Balance Sheet shall demonstrate real Strength of the country. Balance Sheet is not a luxury - it is a must that serves various purposes including for Planning and for obtaining loans.

Moreover, In order to achieve the national goal of doubling farmers’ income in 2022 it is rather essential that there is better utilization of natural resources and creation of more productive assets in the villages.  For that these Comprehensive Profile Statements of every village listing all of their natural resources and assets shall be extremely useful.

The Methodology explained here is developed taking India as a model nation but employing same methodology every country can be monetized especially because all countries maintain their account as per the ‘Standard Accounting Procedure’ prescribed by United Nations by and large. India is one of the largest economies of world and methodology perfected on its basis can be safely applied to any country with minor modifications.

National Assets and Resources are listed below -

S. No.	Asset	Constituents
1	Natural Resources	Land, Forest, Mountains, Rivers, Sea, Water bodies, Air, Sun, Wind, Minerals, Livestock, birds and bees
2	Human Resources	Farmers, Skilled, Semi-skilled, unskilled labor, Businessmen, Industrialists, Executives, Judiciary, Politicians, children, senior citizens including males, females, etc
3	Infrastructure	Rail, Road, Air, water, Power, Education, Health, Garbage collection & disposal, STPs , etc
4	Agriculture	Farms, Irrigation, Borewells, Livestock
5	Mines & quarrying	Minerals, Oil, Gas
6	Manufacturing	Large, Medium & Small Private Factories and Enterprises (MSMEs), Public sector Undertakings,
7	Services sector	Trading, Hospitality, Banking, Insurance, I.T. Professionals, Storage, Tourism
8	Civic  Amenities	Lighting and power, Roads, Hospitals, Markets, Parks, Places of Tourist Interest, etc
9	Real Estate	Residential, Commercial, Malls, Administrative buildings, Storage godowns, Textile, Food, Defence & various other kind of  Parks
10	Public Administration	Government offices, Legislature, Courts, Police Stations, Embassies of foreign countries, Research Institutions, Space Exploration , Internal Security Agencies,
11	Armed Forces ***	Army, Air force, Navy, BSF,
12	Financial Assets	Cash, Bank Deposits, Gold, Silver and Diamonds, Foreign Currency, Loans, Advances, Inventories, Shares of Corporates, Government Securities, etc
13	Intellectual Properties	Music and Films, Literature, Manufacturing process and designs, Space and other research data

Present Financial Reports

In absence of Balance Sheet at present Governments world over depend up on two financial documents – GDP and National Budget – their contents and properties are explained herein after -

GDP and its Limitation

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period (quarterly or yearly) of time in the country. Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.

Definition

The OECD defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)”.  

An IMF publication states that "GDP measures the monetary value of final goods and services—that are bought by the final user—produced in a country in a given period of time (say a quarter or a year).

Total GDP can also be broken down into the contribution of each industry or sector of the economy. The ratio of GDP to the total population of the region is the per capita GDP and the same is called Mean Standard of Living. At present GDP is considered the "world's most powerful statistical indicator of national development and progress".

History

The modern concept of GDP was first developed by Simon Kuznets for a US Congress report in 1934. In this report, Kuznets warned against its use as a measure of welfare. After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country's economy. At that time Gross National Product (GNP) was the preferred estimate, which differed from GDP in that it measured production by a country's citizens at home and abroad rather than its 'resident institutional units'. The switch from "GNP" to "GDP" in the US was in 1991, trailing behind most other nations. The role that measurements of GDP played in World War II was crucial to the subsequent political acceptance of GDP values as indicators of national development and progress. A crucial role was played here by the US Department of Commerce under Milton Gilbert where ideas from Kuznets were embedded into governmental institutions.

Determining gross domestic product (GDP)

GDP can be determined in three ways, all of which should, in principle, give the same result. They are the Production (or output or value added) approach, the Income approach, or the speculated Expenditure approach.

The most direct of the three is the production approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers," colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.

Limitation of GDP - Does High GDP Mean Economic Prosperity?

How GDP Misses the Mark

From the perspective of a citizen living with the day-to-day realities of life, GDP can be rather misleading.

GDP can increase after a car accident or a major flood. GDP can grow rapidly during a war or after a terrorist attack. If all of a city caught fire once again and burnt to the ground, the rebuilding effort just might boost GDP. This is because GDP is very susceptible to the broken window fallacy — false signals of rising prosperity when obvious destruction has taken place.

Service of consumer durables and infrastructure –

Money spent on durable goods is treated as a cost, while the value the purchases provide is treated as a benefit. Long-lasting goods that provide benefits without having to be frequently repurchased are viewed positively. Goods that wear out quickly and drain consumers' wallets when they must be replaced are viewed negatively. GDP, on the other hand, views all expenditures as good news. Infrastructure spending by the government is treated similarly: If spending provides a long-lasting benefit, GDP views it as a positive but if spending drains the government's coffers it should be viewed negative; GPI views it as a negative. Again, GDP views all spending as positive. If the U.S. government spends $2 billion developing a new jet warplane that never lifts off the ground, GDP treats that the same as a hospital delivering $2 billion of cheap medicine or a tech entrepreneur sells $2 billion worth of new software.

Crime - Rising crime costs money in legal fees, medical bills, replacement costs and other outlays. GDP views this spending as a positive development. GPI views it as a negative.

Ministry Releasing GDP data in India –

The Ministry of Statistics and Programme Implementation releases GDP data in India.

A specimen report of India’s GDP

	Sector	GVA (Rupees in Crore) at 2011-12 prices		GVA (Rupees in Crore) at current prices
		2016-17	% share	2016-17	% share
1	Agriculture Sector	1,716,746	15.26	2,484,005	17.95
1.1	Agriculture, forestry & fishing	1,716,746	15.26	2,484,005	17.95
1.11	Crops	1,033,008	9.18	1,530,137	11.05
1.12	Livestock	448,964	3.99	639,912	4.62
1.13	Forestry & logging	138,779	1.23	180,465	1.30
1.14	Fishing and aquaculture	95,996	0.85	133,492	0.96
2	Industry Sector	3,542,821	31.50	4,054,112	29.29
2.1	Mining & quarrying	371,066	3.30	332,947	2.41
2.2	Manufacturing	2,048,711	18.21	2,329,220	16.83
2.21	Food Products, Beverages and Tobacco	174,619	1.55	212,347	1.53
2.22	Textiles, Apparel and Leather Products	274,256	2.44	315,236	2.28
2.23	Metal Products	263,186	2.34	251,748	1.82
2.24	Machinery and Equipment	442,382	3.93	548,807	3.96
2.25	Other Manufactured Goods	894,267	7.95	1,001,081	7.23
2.3	Electricity, gas, water supply & other utility services	244,934	2.18	363,482	2.63
2.4	Construction	878,110	7.81	1,028,463	7.43
3	Services Sector	5,988,062	53.24	7,303,474	52.76
3.1	Trade, repair, hotels and restaurants	1,370,909	12.19	1,586,238	11.46
3.11	Trade & repair services	1,250,502	11.12	1,446,832	10.45
3.12	Hotels & restaurants	120,407	1.07	139,406	1.01
3.2	Transport, storage, communication & services related to broadcasting	766,193	6.81	935,575	6.76
3.21	Railways	84,594	0.75	106,582	0.77
3.22	Road transport	362,077	3.22	434,588	3.14
3.23	Water transport	8,578	0.08	6,848	0.05
3.24	Air transport	7,184	0.06	20,655	0.15
3.25	Services incidental to transport	86,617	0.77	103,496	0.75
3.26	Storage	5,869	0.05	6,888	0.05
3.27	Communication & services related to broadcasting	211,274	1.88	256,518	1.85
3.3	Financial, real estate & prof servs	2,437,857	21.67	2,857,322	20.64
3.31	Financial services	682,553	6.07	742,936	5.37
3.32	Real estate, ownership of dwelling & professional services	1,755,304	15.61	2,114,386	15.28
3.4	Community, social & pers. Servs	1,413,103	12.56	1,924,339	13.90
3.41	Public administration & defence	637,056	5.66	859,615	6.21
3.42	Other services	776,047	6.90	1,064,724	7.69
	GVA at basic prices	11,247,629		13,841,591

The above report does not reflect monetary value of all kinds of assets that have produced these goods and services.

National Budget – a statement of Revenue and Expenditure                                          

Budget is an estimate of Income and Expenditure for a set period of time. A national budget is the budget of a country. The government gets money from various sources like taxes and fees, Interest on loans given, rent from its assets. It also borrows money, again from various sources. The government spends these funds for various purposes which are divided in to two main categories – Revenue Expenditure and Capital Expenditure. Revenue Expenditure include expenditure on heads like salaries and other costs of government employees, welfare of its people on things like national defense, infrastructure, grants for research, education, and the arts, and social programs such as Social Security and Medicare and also to pay interest on money it has borrowed for various purposes.

Capital expenditure is incurred to create long term assets like infrastructure.

A National budget is an annual financial statement that presents the government's expected revenues and proposed spending for the ensuing financial year. The National Budget is prepared by the Finance Minister. After approval by the President the budget is presented to the Legislature for their consideration. After passing by the legislature, with or without amendment, the Budget is finally approved by the Chief Executive or President. Then all expenses of the nation are incurred within the amount sanctioned under various heads for each Ministry. Similar exercise is carried out by each State of the country.

The budget is also known as the Annual Financial Statement of the country. This document estimates the anticipated government revenues and government expenditures for the ensuing financial year. 

Specimen of a National Budget…

Government of India

BUDGET AT A GLANCE for the Financial Year 2018-19

(In Rs. crore)
		2016-2017	2017-2018	2017-2018	2018-2019
		Actuals	Budget	Revised	Budget
			Estimates	Estimates	Estimates
1	Revenue Receipts	1374203	1515771	1505428	1725738
	2. Tax Revenue	1101372	1227014	1269454	1480649
		(Net to Centre)
	3. Non-Tax Revenue	272831	288757	235974	245089
4	Capital Receipts1	600991	630964	712322	716475
	5. Recovery of Loans	17630	11933	17473	12199
	6. Other Receipts	47743	72500	100000	80000
	7. Borrowings and Other
	Liabilitites2	535618	546531	594849	624276
8	Total Receipts (1+4)	1975194	2146735	2217750	2442213
9	Total Expenditure (10+13)	1975194	2146735	2217750	2442213
10	On  Revenue Account
	of which	1690584	1836934	1944305	2141772
11	Interest Payments	480714	523078	530843	575795
12	Grants in Aid for creation
	of capital assets	165733	195350	189245	195345
13	On Capital Account	284610	309801	273445	300441
14	Revenue Deficit (10-1)	316381	321163	438877	416034
		-2.1	-1.9	-2.6	-2.2
15	Effective Revenue Deficit (14-12)	150648	125813	249632	220689
		-1	-0.7	-1.5	-1.2
16	Fiscal Deficit [9-(1+5+6)]	535618	546531	594849	624276
		-3.5	-3.2	-3.5	-3.3
17	Primary Deficit (16-11)	54904	23453	64006	48481
		-0.4	-0.1	-0.4	-0.3

The Budget also does not give financial value of all Assets of the country.

Balance Sheet and its multifarious advantages

Definition: Balance Sheet is the financial statement of a Company or an Enterprise which includes assets, liabilities, equity capital, total debt, etc. at a point in time. Balance Sheet includes assets on one side, and liabilities on the other. For the Balance Sheet to reflect the true picture, both heads (liabilities & assets) should tally (Assets = Liabilities + Equity). The Balance Sheet gives values for two years – the year last ended and the year before that. Thus it enables the viewer to judge whether the enterprise has grown in the year last ended in comparison to the year before that or lost.

In financial accounting, a Balance Sheet or statement of financial position is a summary of the financial balances of an individual or organization, whether it is a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as Government or not-for-profit entity. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A Balance Sheet is often described as a "snapshot of a company's financial condition". Of the four basic financial statements, the Balance Sheet is the only statement which applies to a single point in time of a business' calendar year.

A standard company Balance Sheet has two sides: assets, on the left and financing, which itself has two parts, liabilities and ownership equity, on the right. (In modern current format of Balance Sheet Assets and Liabilities are listed vertically, first Liabilities followed by Assets).

The main categories of assets are usually listed first, and typically in order of liquidity. Assets are followed by the liabilities. The difference between the assets and the liabilities is known as Equity or the Net Assets or the Net Worth or Capital of the company and according to the accounting equation, Net Worth must equal assets minus liabilities.

Another way to look at the Balance Sheet equation is that total assets equal liabilities plus owner's equity. Looking at the equation in this way shows how assets were financed: how much by borrowing money (liability) and how much by using the owner's money (owner's or shareholders' equity). Balance Sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections "balancing".

Balance Sheet is the indicator of Company profile.

All good Corporates take great pain in presenting their Balance Sheet. They make it a powerful and impressive showcase of all that they have achieved not only in the year gone by but right from their inception. They also present their growth plans for the current year and coming years. The strength of the Corporation is demonstrated by giving various ratios.

The Balance Sheet is a virtual mirror of the Organization. All critical facts and data are presented in a manner that all stake holders of the Organization get a realistic view of the factors of their interest, like for their customers, suppliers, financiers, Government organizations, Share holders, employees and for the talent they want to attract in to their organization. A normal Balance Sheet comprises of some 170 – 200 pages tastefully presented with attractive charts, graphs, pictures, photos of all Top Management, their Factories, important production machines etc. 

Before the computer era printed copy of Balance Sheet was sent to every share holder who ran in to thousands as well as to all stake holders. In the present Computer age the Balance Sheet is uploaded on the website and can be freely downloaded by anybody even if doing no business with the Organization.

Specimen of a Balance Sheet

Statutory Format of Balance Sheet as prescribed by Company Law Board

 Consolidated Balance Sheet - Republic of India 

As At xx xx xxxx                                                           Rupees in Crores

Particulars	Note no	Figures as at the end of current reporting period	Figures as at the end of the previous reporting period
1	2	3	4
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Nature’s gift	1
(b) Inherited at Independence	2
(c) Assets created since Independence	3
(2) Other	4
(3) Non-current liabilities	5
(a) Long-term borrowings	6
(b)	7
(c) Other Long term liabilities	8
(d) Long-term provisions	9
(4) Current liabilities	10
(a) Short-term borrowings	11
["(b) Trade Payables:- (A) total outstanding dues of micro enterprises and small enterprises; and (B) total outstanding dues of creditors other than micro enterprises and small enterprises.".]	12, 13,14
(c) Other current liabilities	15
(d) Short-term provisions	16
TOTAL
II. ASSETS
Non-current assets	17
(1) (a) Fixed assets	18
(i) Tangible assets	19
(ii) Intangible assets	20
(iii) Capital work-in-progress	21
(iv) Intangible assets under development	22
(b) Non-current investments	23
(c) Deferred tax assets (net)	24
(d) Long-term loans and advances	25
(e) Other non-current assets	26
(2) Current assets	27
(a) Current investments	28
(b) Inventories	29
(c) Trade receivables	30
(d) Cash and cash equivalents	31
(e) Short-term loans and advances	32
(f) Other current assets	33
TOTAL

Game changing advantages of a National Balance Sheet

“We manage what we measure.” is the popular adage.

·         Balance Sheet provides most important information about an enterprise – what is its Net Worth! Net worth is the difference between value of Assets and total liability. If after setting off amount of all liabilities there remains a surplus then the Net Worth is called Positive but if Liabilities outweigh Assets then Net Worth is Negative. Net Worth of a sound economy shall always be positive and higher the ratio of assets than liabilities stronger it is.

·         Moreover, in the Balance Sheet data is given for two years. That denotes progress or retard in the year just ended over the previous year. Thus it is the eyes of the entrepreneur and tells him he is growing or he is losing. Purpose of every enterprise is to grow. The Balance Sheet is the most authentic indicator of its performance and a tool to monitor its growth.

·         Another big advantage of a Balance Sheet is that it displays value of all assets of the enterprise in money terms. Value in money terms is easily measurable and can be compared with various criteria than in terms of quantity. For example, India has some 131,326 km length of National Highways. If valued at an average construction cost of Rs. 10crore per km, their value would be a humangous amount of Rs. 13,13,260 crores. Thus information in money terms gives a better understanding.

·         Regular presentation of National Balance Sheet shall put a check on massive corruption in selling, leasing, and disposing of national resources and assets. Even a cursory look on corruption in the past makes a horrible reading.  Government of a nation is repository of public confidence who contribute their hard earned money for development of the country. Experience shows that in India this trust has been hugely abused through unprecedented corruption and complacency. After huge investments in building PSUs many have become unproductive and making loss year after year. Reasons may be many like unsound business plan, complacency at the level of personnel who do not act efficiently and indulge in corruption. For example, profit making Air India was turned into huge loss making enterprise, reason being personal gain and corruption by people at the helm of affairs. Balance Sheet shall keep government functionaries on their toes and not let the public money go waste. 

·         The Balance Sheet is an automatic inducer to growth. It silently enlivens human weakness of growth which in India is called "निन्याबे का फेर ". State and Central Governments shall be automatically induced to increase Net Worth of the respective States and the Nation.

·         Balance Sheet shall invigorate the spirit of competitiveness amongst peer States. Similarly, at national level Prime Minister of India shall be motivated to enhance Net Worth of the Nation to overtake richer economies of America, China, Japan and Britain.

·         Annual Balance Sheet shall provide invaluable data and information to the Administrators and Planners for optimization of return from all of the nation’s natural resources and assets, their safe preservation for future generations, and their effective monitoring saving them from willful abuse by cheaters and thugs. 

·         Tab on Expenditure on unfinished Projects

A big malaise in Government working has been the tendency to declare a Project, spend some money to initiate it and then put it on back burner. Such expenditure brings no advantage and results in to waste of money spent on it. To give example of just one Ministry, while presenting Railway budget for the year 2014-15 the new Railway Minister disclosed and we quote-

 “          18. There has been focus on sanctioning projects rather than completing them. In the last 30 years, as many as 676 projects were sanctioned worth Rs 1,57,883 crore. Of these, only 317 projects could be completed and 359 projects remain to be completed which will now require as much as Rs 1,82,000 crore.

“19. In the last 10 years, 99 New Line projects worth Rs. 60,000 crore were sanctioned out of which only one project is complete till date. In fact, there are 4 projects that are as old as 30 years, but are still not complete for one reason or another. The more projects we add, the thinner we spread our resources and longer it takes to complete them. …”

Source – Budget Speech Railway Minister

One can imagine if such is the state of one Ministry then what could be the total quantum of unfinished Projects by all State and Central Government Ministries. In absence of a Balance Sheet the country does not know how big is the quantum of expenditure incurred on unfinished projects in all State and Central Government Ministries. In Balance Sheet expenditure on unfinished projects shall be reflected prominently. In the Balance Sheet the expenditure incurred on a project that has not been completed is shown under the head “Work in Progress”.  So, with annual publication of National Balance Sheet Government would be accountable for unfinished Projects.

·         The Balance Sheet would show value of total Natural Resources and Assets at the disposal of the State and Central Government. Annual income from these assets would show whether the revenue from them is commensurate or it is being frittered away. For example, in the Annual Budget for FY 2018-19 projected income from National Assets, termed “Non-tax Revenue” is a meager Rs.2.45 Lakh Crore. In absence of total value of Assets we do not know it is how much percent of the assets. As an illustration (crude at that),   if we value land at a flat rate of just Rs. 100/- per sq meter, which is the cost of ordinary cloth, cost of 32.86 lakh sq Km of land area of the country would amount to Rs. 328.60 Lakh Crore. Therefore, the total income of Rs.2.45 Lakh crore from all national assets would be just 0.75% of our land asset only.  Valuation of national assets and resources would provoke thought process as to how to maximize revenue from them.

·         Helpful Financial Ratios - In the business world, there are several helpful ratios that people use to determine a company's long-term profitability and short-term financial outlook. These numbers are of particular interest to those concerned about the credit or sustainability of the company and to anyone considering purchasing the company or shares of it. These ratios include the current ratio and the acid test or liquidity ratio, and they are calculated using information from the Balance Sheet.

·         Investors and Loans - Balance Sheet is an ever-changing document which constantly writes in new assets Enterprise acquires or new liabilities that the Enterprise undertakes. When updated annually, the Balance Sheet will give potential lenders and investors the information they need to make informed decisions about lending money or other resources. Balance Sheet shows the assets, liabilities and net worth, and when compared to earlier versions, current Balance Sheet even reflects country’s ability to collect and pay debts over time. This is extremely important to investors as the Balance Sheet indicates whether or not the country will be able to pay investors back.

·         Priorities Outline -The Balance Sheet gives  an organized view of  current liabilities, including short-term debt in the form of  accounts payable, which is inventory or services purchased from other businesses, and the accrued expenses, which are items, such as wages to employees or taxes, that will soon become due. The Balance Sheet also outlines long-term debt, such as loans. The authorities can compare these figures and accounts to the assets owned, such as cash, land, prepaid accounts, inventory, equipment and accounts receivable, which are the goods or services  provided to customers that still need to be paid for. Looking at these items can help Authorities determine which liabilities are a priority to take care of and which assets can be adjusted or disposed of to help the country's cash flow.

·         Last but not the least, annual accounting and certification of national resources and assets by the concerned Officer In charge shall safeguard them and deter theft, encroachment, illegal possession or disposal at lower price, etc.

Once the country starts making annual Balance Sheet it would be a nightmare to think how the country was administered in the years gone by!!!

  Disclaimer: The article has been compiled for the purpose of providing general knowledge only.  Viewers should make further research on the subject for taking any decision which can have consequences.  This information has been collected through secondary research and publisher is not responsible for any errors in the same

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