Recently, The Indian Express, on the basis of a response to its RTI application, reported that 29 state-owned banks have written off a total of ₹1.14 lakh crore of bad debts (technically called non-performing assets or NPAs) between financial years 2013 and 2015. This is an atrocious waste of public money and a classic case of crony capitalism.
Of course, this is not a unique situation. In 2008, we all saw how in the US private businesses started showing signs of diarrhoea. The State then turned nanny and rushed to conceal the embarrassment of its "otherwise healthy" and "accomplished" babies with adult diapers. Subsequently, the problem became too vast to be contained and the State came up with the "too big to fail" excuse and proffered public funds. Soon after, the ignominy of the mess was forgotten and it was like nothing had ever happened. This sequence of events has been seen several times since the 1970s.
[Big businesses are] sucking resources out of the public system and diverting them to purposes other than what they were approved for.
If this is the universal practice, then why complain?
Here's why: my complaint is with double-speak, in particular that of the Modi government. On one hand there is a promise of pro-people, pro-poor policies. Yet, contrary to all electoral promises, these dream merchants, in their first full-year Budget, implemented massive cuts in the social sector, including in critical areas such as women and child welfare as well as water and sanitation.
It is well known fact that four of 10 stunted children in the world are Indian and about 1.5 million children die annually before turning five. Yet, the government slashed the child welfare budget by half .
When it comes to farmers and their plight Modi becomes suddenly emotional and tearful. But even thousands of farmer suicides did not warrant enough attention to consider a tangible plan to address the cycle of debt.
Banking professionals divide the Indian business sector among corporates and crooks. The NPA crisis may be traced to the highly politicised PSB lending spree between 2008 to 2010. Most of this lending has been partly to industries from the infrastructure and extraction sectors, which were relatively young and floated with political patronage. The list of top 10 most indebted companies accounting for 12 % of total NPA is very revealing. These are (in descending order of honour) Reliance, Vedanta, Essar, Adani, Jaypee, JASW, GMR, Lanco, Videocon and GVK. According to Credit Suisse in recent times the debt level of these top 10 parasites has gone up by 15%. More interestingly, many of these groups run several infrastructure projects, under construction, where the net debt increase has outpaced the capital expenditure during this period, the Credit Suisse report says. According to an article in Forbes, "they are borrowing more than they are investing." In other words sucking resources out of the public system and diverting them to purposes other than what they were approved for.
The list of 10 most indebted companies accounting for 12% of total NPA is revealing -- Reliance, Vedanta, Essar, Adani, Jaypee, JASW, GMR, Lanco, Videocon, GVK.
These are not entrepreneurs like 1800s America's John Deere, a village blacksmith who graduated from repairing simple farm equipment to making tractors. Today, the company taking forward his legacy manufactures 400 HP Combined Harvesters. Such enterprise-building means developing technology, building organizations and honing management technology. Nor are there mad geniuses like Bill Gates or Steve Jobs who can ideate and bring out category-breaking products to generate wealth for society. Our IT sector is a glorified sweat shop. The level of entrepreneurship and skills we are seeing today is only adequate for running at best a street corner grocery shop.
Our business class (with honourable exceptions distinct by their absence in the above merit list) are essentially nothing but rent-seeking vampires.
Our misfortune is compounded by the fact that there is an open nexus between politicians and business, a dangerous trend thrust on us by neoliberal economic policies under the WTO regime. This is going to lead to a US-like situation where the most ill-kept secret is the quid pro quo arrangement between Wall Street and the White House.
A revolving door will emerge in India too, weakening the bureaucracy and facilitating the entry of private professionals as policymakers who will serve their corporate masters who in turn will serve their political masters.
The only difference is that all will happen at much smaller level, so shall we call it the Indian Wall Street or our desi Khau Galli?