Raghuram Rajan’s note to the Parliamentary Standing Committee highlighting the current NPA cri-sis in the country has dispelled the myth that the state of the economy in general and specifically the NPA levels have improved under the BJP government. Not only does Mr Rajan’s note highlight the deplorable condition of recovery of NPAs, it also categorically states that he had submitted a list to the PMO in 2016 but was unaware of the action taken in this regard. This claim raises questions as to why despite the RBI flagging the issue of NPAs at an early stage, the government remained complicit in its approach and instead focused on diverting the truth through its manipulated statis-tics.
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In a response typical of the Modi government, BJP spokespersons have conveniently overlooked their own dismal record in handling the economy and recovering bad loans and have instead resort-ed to their mud slinging tactics against the Opposition. Despite clear data to prove the opposite, the government stubbornly sticks to its dubious ‘facts’ while refusing to answer questions asked by the Opposition leaders on the same. It continues to evade direct questions like how many bad loans were renewed or rolled over since 2014, how many loans since 2014 have turned into bad loans and why they were not recalled.
While the government continues to pin the blame on Congress policies, it needs to be reiterated that despite the numerous restructuring schemes by the Reserve Bank of India, NPAs have increased from Rs 2.83 lakh crore at the end of UPA-II in 2014 to 12 lakh crore today. They constituted 11 per cent of of the gross advances of Public Sector Unit (PSU) banks in 2016. Debt recovery has also decreased over the last 3 years and the general state of the banking sector has only deteriorated. Moreover, not only has the government been unable to revive or recall the NPAs, it also dealt two severe blows to an already dwindling economy through its two pronged offensive of demonetisa-tion and GST. As can be seen today, the effect has been disastrous for the entire economy.
Much of the defence of this government for its series of failures on the economic front has been to blame previous governments for their policies and reluctance to accept its own shortcomings. But the fact remains that despite BJP’s apparent awareness of the potential threat of bad loans under the UPA, there has been no concrete data to prove that the rising NPAs have been effectively handled after almost 5 years in the government. As more and more evidence emerge as proof of the govern-ment’s repeated failures, it is evident that it has become the country’s biggest liability.