Nationalisation has ruined India! In the name of running businesses such as textiles, airlines, power, television, etc. the govt. has robbed India of its potential to reach the superpower status. That is why I advocate STRICTLY LIMITING the powers of the government (all governments – not just Congress). In brief, it should not run ANY business except defending the liberties and lives of its citizens. This includes, at the most, defence, law, and order. Let the government only do this, and nothing more. For if it tries to venture out into entrepreneurship, it is BOUND to fail.
Almost every state-run business (Air India, Doordarshan, SBI, etc.) is running into losses which, in turn, have to be borne by the taxpayers i.e. you and me. The government simply has no incentive to maintain profit, for it does not use its own money. It uses our money. And who doesn’t like enjoy at others’ money especially when you know you are not going to be held accountable?
I recently read an article which explained how the state-run banks such as SBI (State Bank of India), Central Bank of India, and UCO bank had loaned millions of rupees to fund the ongoing operations of govt-run businesses (all of them running into losses) such as power and textiles.
The majority of such loans are from sectors such as iron and steel, infrastructure, textiles, telecom and construction. Now, loans given to fertilizer and non-banking financial companies are also turning bad and being referred to the CDR platform. [Harsh: note that most of these are govt.-run businesses]
The bulk of the restructured assets is on the books of state-run banks, often prodded by the Union government—the majority shareholder—to roll out sector-wide loan recast programmes and rescue ailing industries such as power and textiles.
State-run State Bank of India (SBI), the country’s largest lender, has restructured loans worth aboutRs.33,000 crore, out of which Rs.7,000 crore have turned into NPAs.
Privatisation of all banks is the answer
What’s more, these loans are increasingly turning into bad loans, meaning the debtors are not in a position to pay it back. So these state-run banks are “restructuring” the loans, meaning they are stretching the repayment period by offering a moratorium (i.e. debtors can legally delay their loan payment), reduce interest rates on loans, and many other concessions.
One question that arises in this context is why, in the first place, did SBI loan out funds to loss-making public-sector enterprises? Did it not carry out due-diligence before loaning out? Why waste taxpayers’ money in loaning out to businesses that are destined to fail?
All this is a deeper cycle. We must not allow the government to run ANY business in the first place. privatise all banks, textiles, steel and fertiliser companies, albeit gradually. Not at an instant. Only then can India see some light of emerging out from the mess it is presently mired in.
