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Bailout packages to revive the economy – How far justifiable? – Part 2

In the month of October 2017, the present Indian Government announced a bailout package of Rs. 2.11 Lakh Crores for the Public Sector Banks, majorly to help them recover from the current situation of growing number of Non-Performing Assets (NPA’s). In response to this step taken by the government, as an awakened citizen, I wrote the first part of this blog, dated 28th October 2017, questioning the justifiability of the bailout packages being granted by the Government at the time of recession, especially to the organised sectors like Finance and Real-Estate.

Now, after almost 5 months, the Central Government finally got awakened and realized that blindly issuing bailout packages is not at all justifiable and helps in no way to revive the economy. As per the newspaper report published, on dated 04th April 2018, an officer of the Finance Ministry has been reported saying that the Central Government won’t be granting any bailout packages to the Public Sector Banks, henceforth. Banks have been advised to arrange funds on their own, either by selling their NPA’s or else by merging the banks. (Reference: Article published, on dated 04th April 2018, in Rajasthan Patrika, the Daily Hindi Newspaper).

The above statement, actually validates my views expressed in the following paragraph extracted from the first part of this Blog “Bailout packages to revive the economy – How far justifiable?” – “As it is, the organised sectors are run by professionals, so they are in a far better position to come out of losses incurred by them on account of bad management decisions than the unorganised sectors which mostly incur losses on account of reasons out of their control like natural calamities. Only when the bailout packages are issued to all those who are in die-hard need it will be able to revive the economy as a whole and would be justifiable, not otherwise.”

As it is said that “Better Late than Never”, so it’s good to know that the government has at least started thinking on this line. Although it’s a welcome step from the Central Government, however, at the same time, we should also keep it in mind that it’s just a claim made by one of the officers of the Finance Ministry. Hence, we better wait and watch to witness if it actually gets implemented by the Central Government in the right spirit or not.

To be very honest, it’s easier said than done, especially, due to the fact that time and again there is news of the involvement of some of the well-known politicians/personalities or their close ones in the defaults pertaining to big-ticket size loan. Hence, it would actually not be an easy step for the government. Let’s see, if in this case, it’s the Public Interest that takes precedence over the Private Interest of the chosen few or not.

I do hope that the Government and the Finance Ministry takes every measure to implement this thoughtful decision in its true spirit, which in turn will surely benefit the economy, as a whole. Until the time government takes such strong steps, the wilful defaulters are going to enjoy their leisurely time, after absconding with the hard-earned money of the common man. It’s a high time for the Government and the Reserve Bank of India (RBI) to tighten up the controls and close the loopholes present in the system.

Stay in touch.

God Bless!


Peyush Jain