Ten years after the global financial crisis, a debt-fuelled world economy is headed towards another crash, the IMF has warned. With the Rupee at a record low, unemployment at a 20-year high, and 78 of its largest corporations defaulting on massive debts, India’s rapidly emerging as the epicentre of a crisis that could dwarf 2008.
India’s former energy secretary E.A.S. Sharma writes in The Wire: Everyone knows that the NPA problem is due to the lack of due diligence on the part of banks. If banks were to refuse new loans to some of these indebted companies, nearly 40% of the coal blocks assigned to them would not get developed.
The total outstanding loans of public sector banks stands at Rs 6.8 lakh crores. Of this, 70% belongs to the corporate sector, whereas only 1% of the defaulters are farmers. Why’s the banking system designed to favour the rich who already have many perks, while the poor pay a higher price to sustain their livelihoods?
Devinder Sharma writes: After a month of demonetisation, the picture in the rural areas remains too bleak. I know of villages where the farmers had to return empty handed even after seven days of queuing up. As a TISS study points out, nearly 81 per cent of the villages do not have access to banking.
Shankar Gopalakrishnan writes: Demonetisation’s biggest impact will be on the distribution of resources within the economy, whatever happens to the economy as a whole. Demonetisation’s a giant vacuum, sucking up the resources of the weak and delivering them to the powerful, while acting like it’s doing the opposite. More importantly, this transfer will be permanent.
Acclaimed journalist P. Sainath reports from rural Maharashtra: The “Modi masterstroke”, a term contrived by assorted anchors and other clowns on television to hail an unbelievably stupid action, is spreading agony and misery in its wake across the countryside. If there’s been any stroke, it’s the one the heart of the rural economy has suffered.
Nitin Sethi scoops the latest instance of cronyism: The environment ministry has withdrawn a Rs 200 crore fine from Adani Ports for damaging the environment imposed by the UPA government, the biggest penalty for green violations on record, and also extended a 2009 environmental clearance for the company’s waterfront development project at Mundra in Gujarat.
Is ‘crony capitalism’ behind Rajan’s impending exit? RBI has been cracking the whip on major banks, collectively saddled with Rs 5,00,000 crore of bad loans. The banks in turn started forcing big debtors–including Reliance, Essar and Adani-to sell prized assets to repay debts. The numbers in this May 8 report in The Hindu speak volumes.