Paving the path to prosperity

As a part of its ongoing election campaign for Karnataka state elections, Congress party got ex- Prime Minister Shri Manmohan Singh to criticize Modi government’s management of Indian economy at a press conference in Bengaluru. It must be said that the critique was based on half-truths designed to mislead than to enlighten.  

In the said press conference it was claimed that the UPA delivered an average growth rate of 7.8 percent under turbulent global conditions whereas the NDA, has managed lesser growth rate despite favorable international climate and low oil prices. In order to see through the dishonesty in this statement, we will need to segregate the performance of UPA I and UPA II. What Shri Singh has conveniently ignored is the fact that in 2004, UPA I inherited an economy that was in pink of its health, thanks to the macroeconomic policies of the NDA government headed by Shri Atal Bihari Vajpayee. Add to this the fact that, the Global Economy and international trade had witnessed some of its best years during this period. The average annual GDP growth rate of India during this period was 8.45 per annum.

No doubt, global factors had turned somewhat adverse during UPA II, but fiscally profligate policies of UPA I were coming home to roost during the tenure of UPA II. High Inflation had broken the back of the common man. When Mr Singh relinquished power in 2014 the economy was at the edge of a precipice (India was infamously part of the ‘Global fragile five’). It is instructive to note that the growth rate during the last two years of Manmohan Singh’s tenure was 5.4 and 6.1 percent respectively, with very high fiscal and current account deficits and low foreign exchange reserves.

Rising non-performing assets (NPA) of the banking system is one of the criticisms. There has been a relentless attempt by the Congress party to confuse the public by mentioning the loan write-offs and farm loan waiver in the same vein. Actually the Corporate loans are not being written off, but the banks are making provisions for the bad loans created under the previous UPA regime, so that the banks balance sheets are strengthened. All earlier attempts like SDR, S4A, CDR, LoC, LoU etc, to tackle NPA were simply to restructure and ever greening bad loans. Increased NPA is the result of the Modi Government identifying and recognizing a problem that existed in the system. The bad loans have increased by a magnitude of three times (from Rs 2.61 lakh crore to Rs 8.4 lakh crore by September, 2017) out of the outstanding loans in 2014 only.

The Narendra Modi government has enacted The Insolvency and Bankruptcy Code (IBC), which is helping in recovery of Bad Loans from the defaulters possible for the first time. The prospect of defaulting promoters losing control of their companies was unthinkable before IBC. ‘The Economist’, whose antipathy towards BJP is well known, has also said that due to IBC, “the outlines of a fresh era in Indian capitalism are taking shape.”

Congress and Mr Singh have also tried to create ruckus about the tax collection by the government. They say that the Government has collected Rs. 10 lakh crore through taxes on petroleum products without mentioning that this collected over the last four years. The taxes on petroleum products are counter-cyclical in nature and the Government has reduced them to a certain extent due to rising prices. It should also be noted that the administered price mechanism (APM) followed during the UPA years had led to hidden subsidies through the issuance of Oil Bonds, without provisioning in the budget. So far as appropriation of this revenue is concerned, Government has been able to bring down the fiscal deficit from 4.48 percent of GDP in 2013-14 to 3.24 in 2017-18 and keeping inflation under check. At the same time increased government spending on infrastructure.

Infrastructure spending is one of the focus areas of Modi Government because of its multiplier effect on other sectors of the economy and better quality of life for the common men. From spending Rs. 1,74,000 crore on infrastructure in the FY 15, the spending in FY 18 is expected to be Rs. 2,92,200 crore - an annual increase of 19 % per annum. The average annual construction of highways in the three-year period of NDA government stood at 6,200 kms against 5,000 kms in the preceding three years, similar is the case for rural roads, irrigation coverage and low cost housing. The increased government spending has also created demand for cement, steel and construction equipment.

On agriculture sector Shri Singh has claimed that in the last four years current government has reversed the successes of UPA government of increasing MSP and rise in exports. But the fact is that the current government has recognized that the problem in agriculture sector is not one of production, but of income security. To address rural distress, focus of the government has shifted from increasing production to doubling of farmer’s income. A large number of steps like e-NAM and model APMC Act, better agriculture risk mitigation through insurance has been taken to ensure that farmers get better price for their produce.

Independent bodies have also attested the current stellar performance of Indian economy. Centre for International Development at Harvard University in its report has said that India would be the fastest growing economy in the world in the coming decade. In 2017 Moody’s raised India’s sovereign rating from Baa3 to Baa2 after a gap of 13 years.

UPA is too recent in our memories to forget that Mr Singh led Congress government was not only one of the most corrupt governments since independence but also poor economic manager. The government is still willing to engage with Congress party because it shares Manmohan Singh’s belief that no one person can be the repository of all wisdom in a complex and diverse country like India. He should try to convince his party to shed its confrontationist attitude towards the Government. Wasting full sessions of Parliament is neither going to help the nation nor the Congress.

People of Karnataka are intelligent enough to see through the lies, deceit and inefficiency of the Siddaramaiah government. Whatever Congress party does, its fate is already sealed so far as the Karnataka assembly elections are concerned.

Gopal Krishna Agarwal

National Spokesperson on Economic affairs of BJP

Gopal.agarwal@bjp.org

Lack Of Technical Evaluation

There are several factors ailing corporate India. From the stakeholders’ viewpoint, it boils down to ease of doing business (EODB); whether it is regulations, compliances, permission or a level playing field. 

From a corporate point of view, the success or failure of a business will largely depend on its corporate governance. Corporate governance doesn’t mean the composition of board and how decisions are arrived at, but how companies identify projects, evaluate them technically, undertake feasibility studies and calculate the payback period. Otherwise how do you explain big corporate houses taking up and committing mega investments in infrastructure projects without even land acquisition in place?  

Similar is the case with power generation, steel production and telecom sectors. In all these segments, we find large non-performing assets. Because there was little estimation about what will be the future demand; how much capacity is being generated; is it in sync with business life cycles; its impact on return on equity; and little consideration for backward and forward supply chain integration. Now we are saddled with many unviable projects with over capacity. 

The corporate world will have to take responsibility for selection of projects and proper feasibility studies. They will have to own up the success or failure of their businesses, and then alone can there be an exit route for genuine business risks. 

This evaluation should also take place at the financial institutions level. A corporate house cannot take up a project simply because finance is available. Similarly, banks cannot finance a project because a big name is associated with it or there is a lead banker, as is done in consortium finance. 

At the government’s level, there is a lack of developmental financial institutions. This gap cannot be filled by commercial banks alone. Commercial banks are lending merely on the basis of financial feasibility studies; relying on outside technical reports. Term lending should not be done without technical evaluation by experts within the institutions. Generally, developmental financial institutions have in built capacity for technical evaluation. At present, we lack such institutions. Earlier, we had Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), etc. Over time such institutions have been dismantled or converted into commercial banks.

Along with the removal of bottlenecks in factors of production such as land, labour and capital in progress, the government has to establish developmental financial institutions and the corporate world has to improve its corporate governance at the project level, evaluating them thoroughly. Only then the true benefit of such important government initiatives such as integrated cluster development for global supply chain, and defense corridors incorporating domestic requirements for captive demand, will bring desired results.

Gopal Krishna Agrawal

National Spokesperson of BJP on economic affairs

gopal.agarwal@bjp.org

Modi Government: Hype VS Reality

As the Modi government completes 4 years of its first term in office and the nation braces itself for the general elections next year, it is opportune moment to understand the inner motivations of the Government that shape its policies and workings. The victory of Narendra Modi led BJP in the 2014 general election was a tectonic shift in Indian politics. The mandate was a rejection of incrementalism in favour of transformative changes. Modi was voted to power on the promise of accelerating economic growth, creating corruption free environment and achieving participative development.

Economic Philosophy: Modi government believes in being fiscally responsible, increasing efficiency of government expenditure and makes laws and policies that favour empowerment over entitlement.

Within the ambit of this philosophy and guided by ‘Antyodaya’, government is unabashedly pro-poor. Committed to address the challenge of slow economic growth and inequality, the government is not dogmatic about the instruments that should be used. This a clear shift from the policy of doles and entitlement followed by the UPA government.

Focus on infrastructure spending and increased allocation for economically disadvantaged sections of the society required higher governmental spending. Achieving this while at the same time reducing fiscal deficit called for increasing the tax to GDP ratio. Towards this goal, government implemented the Goods and Services Tax (GST) which is the biggest tax reform since independence. GST has broadened the tax base by creating a system where registration, filing, assessment, credit and refund are all online with little scope for subjective intervention and harassment.

Inflation is tamed and fiscal deficit is controlled by the Government by taking strong policy decisions. The government has tried to address all pervasive corruption through steps like demonetization, direct benefit transfer (DBT), Jan Dhan Accounts, Benami Properties Act and increased transparency in governmental working. Deregistration of shell companies, renegotiation of bilateral tax treaties, Income Disclosure Schemes (IDS) have been other steps in this direction. Business transactions through banking channels are being encouraged so that they leave an audit trail.

Insolvency and Bankruptcy Code (IBC) has been one of the biggest reforms in the factors’ market. Promoters of defaulter companies are facing a real challenge of losing control over their companies. The successful resolution of the NPA of Bhushan Steel Limited under the IBC is going to be a game-changer for the banking sector. Financial Regulation and Deposit Insurance (FRDI) Bill seeks to create an institutional setup to resolve distress in financial institutions but is facing opposition from Congress party.

The kleptocracy that was UPA had led to a disappointment in the international community about the future of India. A hallmark of current government’s foreign policy has been the concerted attempt to dispel this image and to assure the global community that India will realize its true potential. The trust of the global community is vindicated by the ever rising foreign direct investments (FDI) in India.

Social philosophy: When it comes to the social dimension of its programs and policies Modi government believes in scale, speed and the power of mass movement to realise the objective of Social upliftment.

Sanitation campaign under the aegis of ‘Swachh Bharat Abhiyan’ is to provide a life of dignity and honour to the poor, irrespective of their religion, caste or gender. ‘Beti bachao Beti padhao’ initiative of the government seeks to provide equality of status and opportunity to our daughters. The government has been successful in creating awareness and public participation.  Modi Government’s stand in the Hon’ble Supreme Court in the matter of triple talaq flowed from its conviction that the practice was unconscionable and did grave injustice to Muslim women.

Political philosophy: ‘Sabka saath sabka vikas’ which loosely translates as a government that enjoys the support of every section of the society and that works for the development of all, is the credo of Modi government.

Modi government is not guided by narrow electoral considerations. The difference with the working of the Congress led UPA is too obvious to be missed. The Congress government during the period of 2004-2014 tried to institutionalize the cleavages of the Indian society with the hope to reap electoral gains. It made all attempts to pass a ‘Communal Violence Bill’ that was manifestly against the Hindus as was the Right to Education Act which exempted only minority educational institutions from its ambit, creating an incentive for various sects to dissociate from Hinduism. The UPA government has also constituted Sachar Committee for Muslims and was trying to make changes which it clearly knew to be unconstitutional. A completely fabricated narrative by the name of ‘Saffron terror’ was sought to be developed by Congress government in order to consolidate Muslim votes.

Modi government believes that responsive and effective governance also ensures electoral success. Thus so far as the government is concerned it should respect the mandate of the people by focusing on doing its job. It also firmly believes that good economics is good politics. Unlike the earlier governments, Modi government has not created vested interest for limited number of people in its continuation. The government has created higher benchmarks and evaluation matrix for fixing accountability and is willing to defend its performance. The success of BJP in the state elections since 2014 bear testimony to the fact that Modi government is reaping political rewards for its work at the centre.

Gopal Krishna Agrawal

National Spokesperson of BJP on economic affairs

gopal.agarwal@bjp.org

The Modi-Xi bonhomie at Wuhan

The global interest generated by the visit of Prime Minister Narendra Modi to Wuhan for an ‘informal’ summit meeting with the Chinese President Xi Jinping is testimony to the importance of these two Asian giants in the present global order.

China and India are not only important for each other, their agreements or disagreements on issues can now influence the global narrative. The world today is dealing with intractable issues of terrorism, rise in protectionism and climate change, and both India and China have to make important contributions in these matters.

Pain points

There are many sore points in Indo-China relations. The dispute arising from China’s refusal to accept MacMahan Line as the international border hangs like Damocles’ sword over our relationship and the stand-off at Doklam was a chilling reminder of it.

China’s unqualified support to Pakistan has also been a cause of concern here. It has allowed Pakistan to raise its stakes against India.

India has also expressed its displeasure at the ‘One Belt One Road’ project passing through Pakistan occupied Kashmir . India’s attempt to get Masood Azhar designated as an international terrorist by the United Nations has constantly been vetoed by China.

It has also frustrated India’s goal of becoming a member of the Nuclear Suppliers Group. China’s refusal to share river water data on Brahmaputra is also an irritant.

China has its own reasons to be frosty with India. India’s asylum to Tibetans is not viewed very kindly by it. India’s growing proximity with the US and the coalescing of this association with Japan and Australia with a view to ensure freedom of navigation in the South China Sea irks China.

China’s riding roughshod over its smaller neighbours has led these countries developing closer ties with India, which, even with all its limitations, is seen as a country that can stand up to China. It is in this background that this informal summit is taking place.

In spite of these hiccups, there are several areas in which India can be benefit from better ties with China. China is India’s biggest trading partner and runs a considerable balance of trade surplus with India at around $50 billion. India has expressed its discomfort at this skewed trade relationship and China has expressed its willingness to address the issue.

With labour costs rising in China, a lot of low value-addition manufacturing will become internationally uncompetitive.

India can benefit from this by insisting that Indian MSME clusters be made part of Chinese global supply chain.

The second leg of achieving trade balance can be higher exports of agricultural and pharmaceutical goods and IT services. India must insist that tariff and non-tariff barriers do not stultify the export of products and services in these categories. India should also insist on local production of Chinese imports to bring down the trade deficit. Such a shift in manufacturing will also complement the government’s ‘Make in India’ initiative.

FDI from China

India also stands to benefit if it can attract foreign direct investment (FDI) from China. According to the RBI’s provisional figures for 2016-17, FDI received from China was a mere $198 million whereas the total FDI received that year was $36.32 billion.

According to the World Investment Report 2017, in 2016 China was the second largest source of outward FDI, at $183 billion. China as a source of FDI is, therefore, virtually untapped. FDI from China can be in railways and the power, fintech and infrastructure sectors, where India needs huge capital investments.

India can also work with China in the areas of energy security, water security and climate change. Indian and Chinese interests converge on the issue of energy security as both are dependent on foreign sources for fossil fuels.

China can also help in developing our renewable energy sector.

Gains to China from a good relationship with India are also considerable. As China prospers it would need outlet for its capital. India, with its vast market, can be one of the attractive opportunities. China’s ambitious ‘One Belt One Road’ project cannot be truly successful without the participation of India.

India and China share very old cultural and civilisational ties. It is hoped that the sagacity of the leadership of these two countries at the Wuhan meet will provide the two countries with a new template to revive the old bonds.

Gopal Krishna Agrawal

National Spokesperson of BJP

Gopal.agarwal@bjp.org

Save The Constitution: From Whom?

The attempt of the Congress party to impeach the Chief Justice of India merely on allegations has set a very dangerous precedent for our polity. Democratic values require that political parties have patience when in opposition. Democratic constitutions have carved out a special place for opposition and they are supposed to play that role responsibly. The problem has arisen because the Congress believes it has birthright to rule over India and its commitment to democratic ethos holds good only till it keeps retaining power. Once out of power, it is working to undermine the very structure that keeps the country together. Congress’s disdain for democratic values is also very clear from the complete absence of it in its inner party structure and workings. Congress is not an ideologically coherent party and power is the glue that keeps it together. There is no ‘lakshman rekha’ for it. This has been the history of the Congress and its first family.

Jawahar Lal Nehru made concerted attempts to ensure that any challenge to his government or to his leadership did not emerge from any corner. As prime minister, he undermined the contributions of his contemporaries in the Congress like Sardar Patel, Dr Bhimrao Ambedkar, Dr Shyama Prasad Mookerjee etc and sought to discredit rival ideologies, for e.g, by linking the murder of Mahatma Gandhi to the Rastriya Swayamsevak Sangh (RSS).

Emergency, the only blot on our vibrant democracy, was imposed by the Congress government under Smt Indira Gandhi, when she saw power slipping out of her hands. Similarly Rajiv Gandhi, in his desperate attempt to woo Muslim electorate, reversed the hon’ble Supreme Court’s verdict in the Shah Bano case and when faced by a political backlash, allowed the shilanyas at Ram Janmbhoomi at Ayodhya. It is in this context that Salman Kurshid had to accept that Congress has the blood of Muslims on its hands.

It has to be accepted that our Government, in spite of many initiative still being work in progress, has done a remarkable job in a short span of 4 years and is comfortably placed for 2019 general election. Thus, Congress is faced with an existential dilemma and has resorted to mindless and vicious attacks on constitutional and other institutions. It has done greatest disservice to the nation by attacking the Supreme Court, the Election Commission and the Defense Forces.

When Congress performed abysmally in the Uttar Pradesh assembly elections in 2017, it laid the blame on the door of the venerable Election Commission of India and the electronic voting machines (EVM). Democracy has taken deep roots in this country because the people have faith in its electoral process. A country deemed to be unfit for democracy, has seen peaceful transfers of power. By questioning the credibility and impartiality of election commission, Congress is sowing seeds of a tree that will bear bitter fruits in the future.

Similar has been the attitude of the Congress towards the hon’ble Supreme Court of India. So long as the Congress did not have problems with the decisions of the Supreme Court, it chose to keep quite but raised grave doubts on the impartiality of this institution when in certain matters the decisions did not meet the wishes of the Party. The most reprehensible attempt to bully the higher judiciary of the country was its decision to impeach the Chief Justice of India on completely baseless grounds, which was rejected by the Chairman of the Rajya Sabha.

It must be said that the manner in which the impeachment drama has unfolded has led credence to the theory that the initial threat of impeachment was a hint to the CJI of the consequence that was likely to follow if he did not deliver order which the Congress wanted in the PIL seeking investigation in Judge Loya’s death. The initiation of impeachment is also to compel the CJI to not take up the Ayodhya dispute matter.

In September, 2016 the Government announced that Indian armed forces had carried out surgical strikes across the Line of Control (LoC) in Jammu and Kashmir in response to the Pakistan sponsored terrorism. Congress demanded proof from the government about the surgical strikes. Dragging the completely apolitical defense forces in the political slugfest was a new low in Indian politics.

Contrast all these with the behavior of the BJP and its predecessor Jan Sangh. It had ideological differences with the Congress government but it showed full faith in democracy and has never attacked the democratic institutions. We kept patience for 60 years since independence expressing dissent, but never disrupting governance.

In a vast country like India with diversity and long historical background there is bound to be a multiplicity of values, interests and beliefs and multiple parties representing them, but parties that undermine the building blocks of this country and its society, will not be accepted by the voters. The same fate awaits the Congress party now under Rahul Gandhi.

Gopal Krishna Agrawal

National Spokesperson of BJP

Gopal.agarwal@bjp.org

Modi in China: Mending strained ties for mutual benefit

The global interest generated by the visit of prime minister Narendra Modi to Wuhan for an ‘informal’ summit meeting with the Chinese president Xi Jinping is a testimony to the importance of these two Asian giants in the present global order. China and India are not only important for each other, their agreements or disagreements on issues can now influence the global narrative. The world today is dealing with intractable issues of terrorism, rise in protectionism and climate change and both India and China have to make important contributions in these matters.

Modi government’s foreign policy has been focused on developing bilateral ties to serve India’s interest with various countries. Bilateral relations are all about give-and-take.

There are many sore points in the Indo-China relationship from our point of view. The dispute arising from China’s refusal to accept Macmohan line as the international border hangs like Damocles sword over our relationship and the standoff at Doklam was a chilling reminder of it. China’s unqualified support to Pakistan has also been a cause of concern here. It has allowed Pakistan to raise its stakes against India. India has also expressed its displeasure at the ‘One Belt One Road’ (OBOR) passing through Pakistan occupied Kashmir (POK). India’s attempt to get Masood Azhar designated as international terrorist by the United Nations has constantly been vetoed by China. It has also frustrated India’s goal of becoming a member of Nuclear Suppliers Group (NSG). China’s refusal to share river water data on Brahmaputra and others was also an irritant.

China has its own reasons to be frosty with India. India’s asylum to Tibetians is not viewed very kindly by it. India’s growing proximity with United States of America and the coalescing of this association with Japan and Australia with a view to ensure freedom of navigation in the South China Sea irks China. Chinese riding roughshod over its smaller neighbours has led these countries to develop closer ties with India, which even with all its limitations, is seen as a country that can stand up to China. It is in this background that this informal summit is taking place.

In spite of all these hiccups, there are several considerations in which India can be benefited from better ties with China. China is the biggest trading partner of India and runs a considerable balance of trade surplus with India at around $50 billion. India has expressed its discomfort at this skewed trade relationship and China has expressed its willingness to address the issue. With the labour cost rising in China, a lot of low value addition manufacturing will become internationally uncompetitive and will have to move out to countries. India can benefit from this by insisting that Indian MSME clusters be made part of Chinese global supply chain. The second leg of achieving trade balance can be higher exports of agricultural and pharmaceutical goods and IT services. India must insist that tariff and non-tariff barriers do not stultify the export of Indian products and services in these categories. It is of paramount importance that India finds outlet for its increasing agricultural production, failing which Indian farmers will continue to suffer from price crashes. India should also insist on local production of Chinese imports to bring down trade deficit. Such a shift in manufacturing will also complement government’s ‘Make in India’ initiative.

India also stands to benefit if it can attract foreign direct investment (FDI) from China. According to the provisional figures for the year 2016-17 of the Reserve Bank of India, FDI received from China was USD 198 million whereas the total FDI received that year was USD 36.32 billion. Thus China’s share in total FDI was about 0.55 percent. According to the World Investment Report 2017, which was jointly released by the United Nations Conference on Trade and Development and the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, China was the second largest source of outward FDI in the year 2016 with the figure being USD 183 billion. China as a source of FDI is therefore virtually untapped. These FDI can be in the field of Power, Fintech, infrastructure sector and railways, where India needs huge capital investments.

India can also work with China in the areas of energy security, water security and climate change. Indian and Chinese interests converge on the issue of energy security as they both are dependent on foreign sources of fossil fuels. At the recently concluded 16^th International Energy Forum, it was agreed that India and China will work together to leverage their buying power to get better deals from oil exporting countries. China can also be of great help in developing our renewable energy sector. Mansarovar, which is the source of three major rives that pass through India, lies in China and we need Chinese cooperation in order to fully utilize these rivers.

Gains to China from a good relationship with India are also considerable. Assured of a responsible behavior from China in consonance with the international laws, India will have no reason to be a part of any international containment strategy against China. Further, as China prospers it would need outlet for its capital. India, with its vast market, can be one of the attractive opportunities. China’s most ambitious global signature project of One Belt One Road, which seeks to recreate the silk route of the old times, cannot be truly successful without the participation of India.

India and China share very old cultural and civilizational ties. It is hoped that the sagacity of the leadership of these two countries at the Wuhan meet will provide the two countries with a new template to revive the old bonds.

Gopal Krishna Agrawal

National Spokesperson on Economic affairs of BJP

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Identification And Resolution of NPA; Regarding Strength of Our Banks

By Gopal Krishna Agarwal,

Narendra Modi is carrying out economic reforms in the short time available to him and rebuilding a transparent and corruption free business ecosystem, destroyed by crony capitalism under the UPA. The benefits of his decisions will be slow and realized in the years ahead.

In 2014, we inherited feeble macroeconomic parameters in the form of high inflation, slow GDP growth and a weak financial ecosystem. Over the years, the nexus of politicians, financial institutions and corporate world had weakened the foundations of this structure. And, without resolving these issues, we could not have progressed.

There was no middle ground. Either we compromised and continued as such, or demolished the edifice of corruption and built a new structure. Prime Minister Narendra Modi chose the second. The pain was real but so was the malaise.

With unidentified NPA and no surety of what lay beneath the carpet, the job was tough and not for the faint hearted. Even now, the estimated NPAs are of about Rs. 9 lakh crore. Yes, there was scope for a minor deviation, but that wouldn't have been enough. Instead, with adequate provisioning and sufficient liquidity due to recapitalization, the government has managed to put banks in a position to tide over the crisis.

To understand this better, we must know that NPA has three components. Firstly, there are genuine failures arising out of business risks. Secondly, there's a large chunk of over leveraged loans. And thirdly, a whole lot of fraud is perpetrated by miscreants in the banking system. Once the gross NPA has been identified, government has to deal separately with each of these three components.

Genuine failures need hand holding and formulation of an exit policy. Fraud requires investigation and penal actions on the criminals, apart from strengthening the control and audit mechanism. Finally, bad quality loans and substandard assets need a very careful resolution so that the confidence in the banking institution is not jeopardized, and the money is recovered.

With new legislation such as the Insolvency and Bankruptcy Code, and the resolution mechanism under NCLT in place, the banking sector now has the teeth to bring fraudulent corporate houses to book.

The current banking crisis has its genesis in the UPA regime. The previous government had ignored the existence of NPA and brushed the problem under the carpet. Finally, Prime Minister Modi took the challenge head on and tried to resolve it.