NEW DELHI, Apr 12:
Asserting that politicians need to think beyond populism, Vice President M Venkaiah Naidu Friday said free power and loan waiver schemes are not long-term solutions to farmers’ woes.
The statement assumes significance as political parties are making big promises to woo voters in the ongoing general elections.
“Free power… people want assured power, they want regular power and then loan waiver scheme. They (schemes) are not going to help the farmers in the long-term because this is not the end of the story,” he said at the 125th foundation day celebrations of the Punjab National Bank (PNB).
“We have to see that we supplement the infrastructure, we provide opportunities of better market… timely, affordable and cheaper credit (should be made) available to the farmer. These are the long-term solutions. Policy makers of the country have to think on these lines,” he said.
Main opposition party Congress has promised minimum income guarantee scheme or Nyay to 20 per cent poorest of the country. The scheme is aimed at providing Rs 72,000 a year to the targeted family. On the other hand, the ruling BJP in its poll manifesto has said it will extend Rs 6,000 per year PM KISAN scheme to all farmers. Currently, it is limited to farmers having farm holding of 5 acres. Another political party DMK has promised loan waiver scheme for farmers. On rising non-performing assets (NPAs) in the banking system, he said, it is a great concern as the problem has certainly affected banks’ capacity to lend.
Calling banks to maintain strict vigilance during pre-and post-sanction procedures of loans and never make compromises in the due diligence processes, the vice president said lenders must constantly strengthen their internal processes to effectively monitor funds and maintain discipline in lending.
In the last few years, gross NPAs of banks as a percentage of total loans have increased from nearly 2 per cent of total loans in 2008 to nearly 10 per cent in 2017. “The accumulation of bad loans happened over a long period of time and now it threatens to hamper economic growth by weakening the credit supply channel of the economy. Some of the factors leading to the increased occurrence of NPAs are external, such as decreases in global commodity prices leading to slower exports. Some are more intrinsic to the Indian banking sector,” he said. (PTI)
Time has come for a systemic reform of the Indian banking sector, Naidu said. “There has to be an effective and efficient system of checks and balances in place so that the loopholes in the system are not taken advantage of. We must also take a re-look at the practice of financing big-ticket projects which have long gestation periods and hence face cash flow issues, through deposit-taking commercial banks,” he said.
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