Taxpayers’ NPAs

NO one should be surprised that the government’s announcement to infuse Rs 88,139 crore to revitalise 20 public sector banks on Wednesday has failed to enthuse the market. This tepid response is natural because the announcement fell short of the street’s expectations. The sum has been far less than the Rs 2,11,000 crore booster package promised by the government last year. A stronger banking system is a must for robust economic growth; the sooner the better.

The enormous mess in the form of non-performing assets — about Rs 9,50,000 crore by March-end — needs to be cleared, but not without telling the whole truth to the nation. The reason is simple: huge taxpayers’ money is involved in rescuing these banks that recklessly disbursed loans to defaulters like disgraced Vijay Mallya, without commensurate collaterals. Taking loan from banks is an onerous task for an honest common man; how could it be so easy for unscrupulous defaulters? When the banks want the taxpayers to rescue them then there is no question of business secrets. Even the government must not assist them in keeping the names of the defaulters’ under wraps. Investors’ confidence would not sink if the culprits are named and shamed.

There is a tendency among the public officials to pass NPAs as bona fide omissions. It is surprising that even the government has quietly accepted a staggering Rs 9.5 lakh crore NPAs as a legitimate oversight, despite the fact that Finance Minister Arun Jaitley thinks differently. In his article, “The fiction of loan waiver to capitalists”, Mr Jaitley points at colossal irregularities committed by the erstwhile UPA regime that led to the accumulation of huge NPAs. He prompts the public “to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed”. This is a serious allegation — and, a political allegation at that. As Finance Minister, Mr Jaitley has all resources at his disposal to nab the culprits and bring them to justice. As FM, he should not be speaking like a rabble-rouser, but he must act. Management of nation’s finances is a responsible, complex and demanding chore; it does not lend itself to partisanship. Financial contracts and commitments are politics-neutral.