Financial misrule, frauds plagued Modi’s tenure

The NDA government led by Narendra Modi over the last five years has caused more damage to the economy than giving a big impetus to the growth, a report said.

The economy took a severe hit with the mounting Non Performing Assets (NPA), policies (read Punishment) like Demonetisation, GST, Insolvency and Bankruptcy Code (IBC), Financial Resolution and Deposit Insurance Bill (FRDI), passing of electoral Bonds, experiments with cashless economy and many other policy changes, according to a report by Financial Accountability Network India, a group of civil society activists.

The report makes a scathing attack on the financial mismanagement of the NDA government at a time when the incumbent Modi-led Bharatiya Janata Party government is seeking re-election on the basis of good governance.

Since the day Modi took over in May 2014, the corporates have benefitted over the expense of the common man. As many as 21 Public sector banks and three private banks have collected more than Rs 12,000 crore as a penalty for not maintaining minimum balance from 2014 onwards. The banks have written off Rs 3.16 lakh crore of NPAs during the same time – mostly belonging to large corporates. Almost 82% of the bad loans belong to the corporates, the report reveals.

“Banks should not charge fees and penalties for savings account holders. Financial Inclusion does not mean exploitation of people’s savings after adding them in the banking system,” the report said.

The country’s largest lender – State Bank of India – that serves over 42 crore customers, started charging for not maintaining the minimum balance in 2017 and collected Rs 2,400 crore in next one year as a penalty for the same from savings account holders.

The loans written off between April 2014 and April 2018 by 21 public sector banks were 166% more than the amount written off in the previous 10 years till 2014. Of the entire gamut of NPAs, just 12 accounts, contribute Rs 1.75 lakh crore.

The authors of the report suggest that there are clear-cut connecting dots in all this. "While so much of money is written off for big defaulters, that money is being collected from us customers -- in form of minimum balance charges, floating interest rates. We have tried to talk to every regulator. The government doesn't listen. So clearly it is a part of a proper policy," Sucheta Dalal, Trustee, Money Life Foundation told DH.

The bad loans which have been written off are well over twice the projected budgetary expenditure on health, education and social protection for the year 2018-19 which was Rs 1.38 lakh crore, the report said.

Demonetisation effect

According to the report, post-demonetisation, the medium, small and micro enterprises witnessed job-losses totalling a whopping 45 million as their revenues dipped by 50%.

Demonetisation had brought down the employment ratio in the country with over 3.5 million people losing jobs within a span of four months (by February 2017) after the declaration in November 2016, by Modi.

The note-ban hit the growth by almost 2% percentage points, which has had a domino effect on India’s economy over the years.

The country, under Modi’s tenure, has also witnessed a sharp slowdown in gross fixed capital formation – from 34.3% of nominal GDP in fiscal year 2012 to 28.5% in fiscal year 2017, emancipating out of starker fall in capital formation at the household level, that fell from 15.7% of GDP to mere 9.1% during the same period.

Stark rise in frauds

There has been a stark rise in the frauds under Modi’s tenure, as well. During 2016-17, about 4,693 frauds of more than Rs 1 lakh were reported; which increased to 5,904 in 2017-18, an increase of about 26%.

Over the same period, the value of these frauds increased from Rs 18,698.8 crore to Rs 32,361.27 crore – a jump of unimaginable 73%.

According to one of the reports by rating agency Fitch, Rs 3.5 lakh crore ($48.88 billion) have not been recognised by banks in India as non-performing assets (NPAs).