‘We have land.
We have water.
And we make mud.’
– Ivan Kulekov
The November 8th announcement by the Indian Prime Minister and subsequent decisions and statements by the government will remain etched as landmark events in the economic and political history of India. While some went to the extent of measuring one’s patriotism with long winding queues before bank branches, very soon the initial euphoria gave way to the exasperation. The tone has changed noticeably. Some of those who praised it as a ‘bold, master stroke’ have later started grumbling about ‘bad execution’.
The discussion about the government’s decision and its consequences will invariably be coloured by one’s beliefs and perspectives. Yet, it is important to understand the background before one comes to a concrete conclusion. The truth behind the proclamations needs to be ascertained based on the ground reality and the consequences.
What ails the banking sector? The IMF and World Bank have been mentioning about the Non-performing Assets (NPA) for a long time. According to IMF, Non-performing assets amount to 5.9% of the total amount of loans in India. The World Bank estimated that the bad debts accounted for 2.4% of the total lending by the banks in year 2010 and it rose to 4% by the year 2014.… Read More