By Tathagata Satpathy
Prime Minister Narendra Damodardass Modi’s Independence Day speech, the second since he took power 15 months ago, has been noted more for drama and less for substance. His promises, like making India a developed nation by year 2022 — obviously assuming that he gets one more term in office — will be known more for its bombast and less for its relation to ground realities. At best he tried yet again to transport Indians into a dream world.
Some of what Modi stated in his speech this time may sound encouraging; like the claim that under the provision of a compliance window, tax-avoiding citizens have declared their hidden foreign bank deposits of the order of over 60 billion rupees in the past three months. That might help the exchequer earn a good amount. Or, his promise of electrifying 18,500 villages in the next three years, which could hopefully come true. He claims that to avoid political wrangling, he refrained from naming the districts or states where the electrification works would be done. This could simply mean the achievement, if any, would also remain unnamed.
Modi claimed that no one could allege corruption worth even a paisa against his government. But, contrast this with the studied silence he maintained all through the parliamentary storm over Vyapam, the highly fraudulent recruitment scam that the BJP’s very own Madhya Pradesh government is involved in. Nor did he make a mention of it now. We will refrain from naming other deals like Rafael, which probably did not materialise because the ‘deal’ could not happen.
Modi had a pat on his own back when he spoke of the Jan Dhan Yojana, but it could as well turn out to be a double-edged sword. As high as 17 crore poor Indians have supposedly been brought into the banking network for the first time in their lives. It saw `200 billion being deposited by these people into their accounts. Modi said the money would be used for projects aimed specifically for the poor.
Herein lies the rub. For one, our banking system is crumbling. In the US, this had happened when the middle class used the liberal banking provisions to draw money without proper security, splurged, and could not repay. In India, as it stands now, the super rich have used their influence to take huge loans without sufficient security, used them in wanton ways, and are refusing to repay. What is known as ‘non-performing assets (loans)’ is mostly of crafty entrepreneurs cheating banks by diverting hefty sums from their loan amounts, abruptly stopping repayments, and using their influence to get banks to invoke the NPA provision and take undue benefit out of it. These influential individuals heading some corporates may have easy escape, but banks are under serious strain. There was an overdose of such actions during the UPA period, that’s bleeding banks no end. Whether the reform plans for these banks by the Damodardass government would help remains to be seen.
The amounts deposited in banks by the poor is their hard-earned money. They did so with abundant faith in the government. Modi says it showed their “richness”, implying also that they are not all that poor; or that they had the money but did not know how to deposit it and gain from it, and that here was a Prime Minister who showed them the way. One can only hope against hope that, under the present circumstances, these 17 crore people would not lose the little that they have put under persuasion in their newly opened accounts.
What rankles in our minds is also what former Prime Minister Rajiv Gandhi once said, that, “for every rupee sent (by the government) to the common man, only 17 paise reached him (the rest being pocketed by vested interests).” When Modi uses the 200 billion in banks for projects, 80 per cent of this would land up in the hands of the same vested interests. The probable net result is scary. Even granted that the project delivery systems are improved, that would have a marginal effect. Then also, some 70 per cent of the money gets lost in transit. The poor are losers again.
India had survived the 2008 global economic meltdown partly because of the strengths of our banking system and partly because most Indians have not depended on banks for much of their transactions. That left a leeway, unlike in the case of the US. Using the hard-earned money from the poorest of the poor for government programmes is a dangerous game. It will not just break the backbone of the poor; mismanagement of the money, which is most likely, will eventually also break the back of the national economy.