Reserve Bank deputy governor K.C. Chakraborty has finally set the record straight on what is well known in left-wing development circles: that Corporate India’s loans waived by banks are more (over Rs. 1 lakh crore in the past 13 years) than farm loans to the tune of Rs. 60,000 crores written off under the Debt Waiver and Debt Relief Scheme.
More revealing is that medium and large units have a 50 per cent share in the non-performing assets that the banks have sacrificed.
India Inc is, however, in self-denial as it always decries the government’s loan waiver scheme and sees it as one of the main reasons for the fiscal deficit. Some bad loans are admittedly due to the government’s policy paralysis in the past two years, as infighting between ministries on issues like environment and land have delayed projects that over the years have led to bad loans. India Inc needs to tackle issues like their NPAs, the mollycoddling that RBI governor Raghuram Rajan says they don’t need, and the huge revenues that the government foregoes while incentivising them to do their business. Our sister newspaper Financial Chronicle has computed that the government spends over `1 lakh crore annually by way of export subvention, duty remission and interest subvention to cajole exporters to export.
Dr Chakraborty’s report is a wake-up call to the government to see how Corporate India can be more disciplined and efficient without mollycoddling. It could begin with making it easier to do business honestly in this country.