The Reserve Bank of India has over time proposed a number of steps to fight the problems of non-performing assets, restructuring loans, carrying out reviews of asset quality, acting against promoters and taking over defaulting firms. However, none of these has met with the desirable objective to curb NPAs, which are a significant percentage of most bank loans. The idea of a Public Sector Asset Rehabilitation Agency (PARA) or so-called “bad bank” is not only promising but optimistic as well (“In need of a psycho-economic boost”, October 4). But capital requirement poses a challenge. Demonetisation, which was expected to grant the government extra fiscal stimulus for the constitution of a bad bank to absorb all stressed assets, has failed.
Shivankee Sahu,
Haridwar, Uttarakhand
The point in the article, “Tackling the economic slowdown” (October 3), that greater public investment is needed is interesting. But I wonder how much is needed. Public investment keeps on happening whether the times are good or bad. The drastic drop in GDP in the last quarter, following the trend of previous quarters, should mean that public investment too has practically dropped. I wonder if that has happened. I feel the problem and the solutions have two parts — post- and pre-demonetisation. A major revival can take place and quickly enough if the government abandons its strange fix on the informal economy and its efforts to dry it. It must realise that the informal economy is the way India lives and thrives. Accordingly, it must remonetise the economy fully to pre-November 2016 levels and allow the informal economy to come into full play. Its negative tidings must be addressed separately and individually. The second part is about what happened in the three quarters prior to the note ban. They require separate analysis and remedial measures.
M. Balakrishnan,
Bengaluru
