INDIAN ECONOMY: CORPORATE VERSUS AGRICULTURAL FARMERS — BY ER. KAPIL ARORA
Around 70% of total NPA in India belongs to Corporate Sector, whereas despite being primarily Agricultural Country, the NPA due to Agricultural is around 10% (1 lakh Crore) only.
Further against 70% (7 lakh Crores) NPA which belongs to Corporate Sector, Banks do not have Secured Assets (Securities) more than 20% (2 lakh Crores) whereas in Agricultural NPAs, Banks have adequate Agricultural Land/Cattle to recover almost all the loans.
Now let’s come to NPA w.r.t Population (number of persons involved in causing NPAs)
The number of people involved in NPA in Corporate Sector are only few thousands only, out of which only top 50 Companies owes 50% of total NPA.
In Agricultural Sector, the number of people involved in 10% are in lakhs i.e. the amount taken by Farmers May vary from few thousands to few lakhs only. AND NOT EVEN A SINGLE PERSON FLEW AWAY FROM INDIA TILL DATE because farmers are not thieves but most of such Corporate are.
NOW THINK ABOUT IT, WHO HAS DONE MAXIMUM DAMAGE TO INDIAN ECONOMY, CORPORATE OR FARMERS?
WHAT IS THE MAIN REASON BEHIND BANK’S FAILURE, LENDING TO CORPORATE OR AGRICULTURAL SECTOR?
WHO IS RESPONSIBLE FOR FUNDING CORPORATES MORE THAN SECURITIES MORTGAGED BY BANKS, GOVT. POLICIES OR FARMERS?
SUGGESTIONS /REFORMS
Despite successful Cooperative Societies like IFFCO (Worlds Number one Indian Society), AMUL, VERKA & large number of such Societies at local level, why Govt. is trying to handover the future of Farmers in the hands of Private Corporate Sector?
Can anyone provide any example where Corporate have given benefits/proper price to Farmers till date?
WHY CORPORATE BUT NOT COOPERATIVE SOCIETIES FOR FARMERS AT REGION/BELT LEVEL
From Gobar to Milk, every thing can make profits & play major role in growth of Indian Economy but we are just wasting natural resources.
Just like lending done to Corporate, give financial support to Cooperative Societies in erecting Cold Stores, Gobar Gas Plant, Dry Gobar Pallets, Chemical Fertilizers, Irrigation equipments, Food Parks, Factories, transportation system, etc. etc. In just next 5-10 years, one may witness major reforms in Agricultural Sector.
It will not only increase the income of farmers by manifolds but also create opportunity of increase in employment by manifolds, just help in growth of Indian Economy.
Er. Kapil Arora
President, Council of Engineers
General Secretary, Valuers Association.
2 comments
The demage to Indian economy via NPA of banks started with Agriculture Debt Waiver Scheme 2008 which vitiated whole recovery climate in economy.
Post Global Financial Crisis of 2008, RBI brought as many as 5 schemes of restructuring of loans and these schemes were strategic frauds with Indian Banking System.
In 2015 under Governorship of Mr Raguram Rajan, RBI discontinued all these schemes and came out with Assets Quality Review for banks.
From this period NPAs in large borowers and MSME (the restructuring schemes were meant to shield the loans of these sectors) witnessed huge increase.
Further, we have also to make sectorwise analysis of NPAs as percentage of total advances to the sector.
It always happen when we give relief, bounty or free meal to any sector the chances of misuse cannot be ruled out. In case of large borrower loan accounts this relief (5 schemes of restructuring) were misused to a large extent.
Going by this, the current NPA problem, especially under large borrowal accounts can be termed as systemic rather than sector specific.
On suggestions part of write up my observation is,
1) The names of Amul, Verka have been mentioned and they are providing competitive price to farmers.
2) The farmers should formulate Farmers Producers Organisations (FOOs) which are new means of cooperative movement. This would mitigate the risk of the farmers to a large extend.