booster dose

Source: The Hitavada      Date: 26 Oct 2017 12:01:20


THERE should be no doubt that the national economy would pep up with the massive booster dose the Government has proposed for its revival. Amid assertion that the economy was on a sound footing with fundamentals strong and intact, Union Finance Minister Mr. Arun Jaitley has dished out this huge bail-out package of Rs. 2.11 lakh crore for banks, and assured fund-flow of Rs. 7 lakh crore to infrastructure sector. There is little doubt that such a massive pumping of money into the national economy would make a lot of positive difference to the process of revival.

Of course, the money for the infrastructure sector is to be raised from the public, and to that extent the Government will not be burdened. In the past two decades or so, the Government has perfected the model of raising money from the people. Now also, it proposes to use the similar model to raise funds especially for building of road network of 84,000 kilometers of cumulative length. Obviously, the Government thought of pumping of so much of money into the project of creating a nation-wide road network because it is sure that this model has worked for the country. Buoyed by that experience, the Government has planned a very ambitious project that would make critical and positive difference to national movement of goods and people. Once the proposed road network is complete, it will act as a tremendous booster to the national economy. But even before that final point occurs, the implementation of all those countless road-construction projects would bring fresh wave of enthusiasm in the country as lakhs of locals would get jobs for considerable length of time. To a great extent, the problem of unemployment, especially in rural areas, would get sorted out to considerable extent.

The real concern stems from the banking sector. The Rs. 2.11 lakh crore bail-out package would certainly do a lot of good to the banks. That much money should see most of them through the bad phase, caused mainly due to the massive accumulation of Non-Performing Assets (NPAs). But if the Government does not think of massive, multi-dimensional overhaul of the banking sector, nothing spectacular can be expected from its present way of functioning. So, one of the most challenging tasks for the Government would be to undertake a thorough overhaul of banking sector so that it assumes an intrinsic vibrancy, so badly missing in the past some years.

It is true that non-government banks have added much value to Indian banking in the past twenty-odd years. Yet, their contribution to India’s banking culture remained minimal in the sense they could not influence government-run banks or cooperative banks in sprucing up their method of handling the tasks of modern banking. It is from this point of view that the Government will have to take a very serious re-look at the banks and their functioning in general and undertake a massive and ruthless reform campaign.

This task is easier said than done, for the simple reason that it would involve not just change in rules and regulations but also a near-total transformation of banking culture. Until now, the banks were treated as open grasslands that anybody could exploit. To a large extent, the banks were not allowed to function on their own in a professional manner, thanks to domination of political forces. Unless this is changed and the banks are protected completely from untoward political influences, the bail-out package will serve only a limited purpose. Of course, the banks, too, will have to work on improving standards of their integrity, which came under serious cloud in post-demonetisation period. There is no doubt that the Government is conscious of all these angles. Let us hope, it takes care of these in full detail and depth.