Economic Highlights
New Delhi, 18 November 2019
Three Decades of Loot
INTROSPECT FRAUD ON
PEOPLE
By Shivaji Sarkar
The Indian economy rarely had the kind of
problem it is facing now, pushing the country into a quandary. It is struggling
to look for ways to come out of the morass.
Recall, in 1991, India pawned its gold with
Bank of England and Union Bank of Switzerland to raise $600 million to meet the
balance of payment crisis. But the rest of the economy did not seem to suffer
much. The GDP in 1989-90 grew by 5.2 per cent and in 1991-92 it rose by 5.7 per
cent.
This was the post-Soviet Union collapse
period and India had large exposure to trade with Soviet Union. Despite this,
the overall impact was not felt at the local markets or even rural economy. In
1997-98, the East Asian tigers saw a severe meltdown largely led by the real
estate boom and banking failure. Then too India was not hit.
During 1992 to 1997, it was the period of
largest scams in the stock market, collapse of UTI, siphoning of LIC and many
bank funds through fraudulent manners by the ilks of Harshad Mehta and Ketan Parekh.
It surpassed the records of scams in the first 40 years since independence.
However, in 2007-08 the Lehman sub-prime
crisis owing to unethical and corrupt banking practices in the West singed
India despite no direct exposure to the crisis. The government panicked and
succumbed to combined chorus of the large private corporate. They had seen how
the sub-prime procedures had soared profits of the western corporate despite an
economic crash.
By this time the Left parties had parted ways
with the UPA. It lacked practical advisers and opened up PSB coffers to looting
companies. The 50 private giants took the bulk of the PSB loans then called
“incentives” never to repay. It was almost a repeat of what had happened to
banks in the UK and the US, including the largest AIG.
The banks started tottering. Their NPAs
soared. People’s deposits were squandered away and continue till now. In short,
the Indian crisis started in 1992 and the pattern remains.
The banks, PSBs in particular, but now many
so-called private banks as well, are being systematically swindled away leading
to a crisis of confidence. Officially, NPAs are touching Rs 9.1 lakh crore but
otherwise estimated at Rs 14 lakh crore as there has been a lot of window
dressing through mergers. The digital economy has made swindling easier!
It has hit savings – staple system for
funding India’s growth. The Economic Survey 2018-19 states household savings
dropped to 16.3 per cent in 2018 from 23.6 per cent in 2012, which coincides
with the loot of the deposits by the giants. This is serious and sadly no
government has addressed the issue. In 1960s and before even a 25 paise deposit
was encouraged to fund the development projects. Now deposits are literally
punished with high bank charges, TDS and other accessory fee on withdrawals.
The recent surge in cash hoarding, as per RBI
figures, is a sequel to impractical usurious banking procedures. It has
worsened with fly by night mutual fund operators, where deposits are made but
it dwindles every day.
Earlier, such issues were carefully studied
by Planning Commission and remedies suggested. The NITI Ayog last mulled over
it in July 2017, when Arvind Panagariya said: “Low levels of savings and
investment rates are still a cause of concern. Intense and dedicated efforts
are needed.” But little came after that.
Demonestisation has virtually denuded
household savings. Those who think India’s vast economy, the biggest in the
world in the 100 crore hands, could function through a faulty, slow and
inefficient digital system, apparently are living in a fool’s paradise.
Earlier, there used to be inquisitive and probing
people in the political system who used to drive home sanguine points. But
today somehow in a too much politicised world, such voices are stifled and
stigmatised. Discussion and debates in public domain remain muted and give a taint
which isn’t there. It’s like if someone suggests boosting savings, groups with
vested interests shout for channelising it to the speculative but most
unethical, stock market or such instruments, where the money can easily be
swindled away. Or if it is suggested that Jewar airport (Uttar Pradesh) like
projects would desertify the national capital region, the real estate agents in
chorus say there is no aquifer in that region, as it suits the
construction industry!
Or if poor owners of vehicles call for
rescinding impractical ten-year junking rules, they are branded
“anti-development”. The simple truth is the country is junking wealth creation.
All over the world, the car owner is allowed to have the car for 40 years or more.
Junking cars is bad policy and it certainly leads to slowdown. But those in
power succumb to the lobbies, be it real estate, industry or car makers. The
pollution lobbies are minting tons and the national economy is impoverished.
Yes, the country is drifting because sane
voices are not heard anymore. Rather such voices are stifled. Else Rs 1.76 lakh
crore of the Central bank would not have been squeezed out, which was people’s
money.
Often it is said that Indian’s are sitting on
stockpile of money. Perhaps though most poor are not aware. But they are unable
to pay for the tuition fee of their wards even in socially-funded (that’s not
subsidy) government institutions. Drop-out rate is increasing in private
universities and institutions as the fee is too high. Yet again, the lobbies
are making it unaffordable, be it IITs or IIMs. Education in this country is not
subsidised and it requires social funding, more so as households are losing
savings.
The antyodaya is an all-encompassing
word. It does not mean mere uplift of the last unattended man. Instead, it
means the system should be such that none remains unattended. But if one is
attended and 10 are not tended it would have deleterious effect.
Prices are rising and the number of
unattended is growing. Rhetoric would not solve this. The government must have a
dialogue with all, even with its political rivals and the common man to chalk
out a way. This approach would lead to growth or else the society and economy
would drift.
Mere tinkering with rules would not lead to a
solution. Clearly, the Narendra Modi government must take the right holistic action
to correct the three decades-odd of loot and misdirected Manmohanomics. Sooner
the better, for it as well as the nation.---INFA
(Copyright,
India News & Feature Alliance)
|