DUBIOUS CYCLE OF STATE DOLE AND UNPAID DEBT Under the garb of assisting poor voters, politicians pressure public sector banks to sanction loans that are never repayed and eventually written off. This is a loss to the exchequer, and it proliferates poverty Alongside the vast number of the poor in India, there are enough rich Indians whose assets are enough to wipe out poverty in the country. It is not only the citizens who can contribute in this effort; the Government too has a role to play. The same prudence is required when dealing with public money, as with private wealth. Despite the Supreme Court order to bureaucrats to act only on the written orders of politicians, most civil servants dare not ask for illegal orders in writing, lest their service prospects are harmed. Even when somebody shows the guts, such a civil servant is not protected or shielded by the higher-ups. Corruption and peddling influence and power are all inter-linked. The Government has ordered that if a Member of Parliament makes a request, it should normally be conceded. If for some reason, it is not possible to do so, the situation should be properly explained. It has also laid down the courtesies which should be extended while meeting a particular MP or MLA. The result is for everybody to see — especially in terms of how Government funds or loans are disbursed, almost on non-repayable basis. ‘Non-performing asset’ is a euphemism used by the Reserve Bank of India for dead or lost money, that had been loaned out without due diligence. The extent of such loot from Government-run banks can be judged from the latest RBI report. It says that on March 31, 2012, gross NPAs from the priority sector stood at Rs 56,201 crore, from the non-priority sector at Rs 55,246 crore and the public sector at Rs 217 crore. The RBI admitted that this is due to inadequate credit appraisal. It also clarified that the priority sector makes up the largest share of NPAs at 52.33 per cent. State Bank of India and its associates alone reported NPAs worth Rs 45,695 crore in 2012, up from Rs 16,958 crore in 2003. Other nationalised banks were at Rs 65,969 crore in 2012 versus Rs 35,849 crore in 2003. Apart from poor credit evaluation, another often ignored cause for increasing NPA are the Government’s loan melas usually held when an election is around the corner. This loot of Government money through public sector banks is because of the generous priority list that these banks must adhere to. One reason for the failure of public sector organisations, be they industrial units or financial institutions, is that the Government is almost directly or indirectly controlling them — it dictates terms and decides what should be done etc. Interestingly, an Internet search for major defaulters throws up next to nothing. The author could not find even one site of the Government or a private party that lists those who have defaulted on state loans. It is astonishing as to why the Government would hide such information from the public. Overall, it seems doubtful that the Government or any of the major political parties are keen to tackle poverty. The Central Bureau of Investigation had once sent a proposal to the Government to investigate the Chairman of a bank which had sanctioned hundreds of crore of rupees in loans, on the recommendations of some politicians. The Minister concerned approached the then Prime Minister, who in turn asked me about the case. I told him the position, in the presence of an influential politician, whose party was a coalition partner. I said that I was right on moral and legal grounds, and could see no reason why the tax payers’ money was being squandered. I offered to proceed on retirement or request for transfer to another job. But I had the satisfaction of seeing the offending Chairman being sentenced to jail for a couple of years. NPAs drag on for years, and according to a Deputy Governor of the Reserve Bank of India, in the last 13 years, bad loans worth Rs 2.04 lakh crore have been written off. Yet, not one Chairman or Managing Director of a public sector bank has been held accountable for bad loans. Of course, there are also excellent public sector bank chiefs. In one case, a bank Chairman and Managing Director refused to convene a board meeting as long as a particular nominee was not removed. The sole objective of the nominee was to sanction loans and pocket the commission or a portion of the loan. Naturally, this kind of a casual approach adds to the feeling of a free-for-all environment, especially with those who can peddle their influence. NPAs are like a ball-and-chain around the neck of the economy. Public sector ventures also bear the burden of the Government’s profligacy. “The subsidy burden is now almost becoming back-breaking They are saying that this year’s (2013) burden (combined) will be around Rs 1.4 lakh crore. I have not added the cost overrun of the projects of the Government. The cost overrun observed in infrastructure project was Rs 52,150.68 crore at the end of the 11th Five Year Plan on March 31, 2012,” the Minister of State for Statistics and Programme Implementation had said in a written reply to the Lok Sabha. The Ministry was monitoring the Union Government-funded infrastructure projects costing Rs 20 crore or more till March 2010. This financial limit was raised to Rs 150 crore from April 1, 2010, the Minister had added. If that were added, the picture would become more dismal. What is needed is common sense and not a tag of an economist after one’s name to run the economy of the country. Unfortunately, that is something which has to be applied in different ways in different situations, as the global scenario changes. Certainly, the poorest of the poor should be helped, and in a way that enables them to stand on their own feet. Government doles don’t help them in that.
Posted on: Mon, 02 Dec 2013 07:30:56 +0000
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