Bikky Khosla | 04 Apr, 2017
eventful financial year has come to an end. In the global front, it was
the Brexit referendum that came as the biggest shock of the year,
taking not much time in fuelling talks of another global recession. Then
the US presidential election result stunned the world, followed by the
ripple effects in global financial markets caused by
the US Fed's hawkish stance on rate hike. In the domestic front, what
stood out as a historic economic moment was the demonetisation of high
value currency notes, raising fear of a renewed slowdown in the Indian
economy. But none of these fears materialised into reality, and the year
in fact ended on a high note, with the passage of the key GST related bills in the Parliament.
what's next. With the Goods and Services Tax (GST) becoming a definite
possibility, the Government should now turn its focus on resolving the
bank NPA crisis. Gross NPAs of public sector banks increased to Rs 6.06
lakh crore as on December 31, 2016 as compared to 5.02 lakh crore at the end of March last year, and I think the longer this situation lingers, the more worrying
it will get for the economy. The government has already taken several
steps, including the Insolvency and Bankruptcy Code, amendments to the
DRT and Sarfaesi Acts and more foreign investment in asset
reconstruction companies, but the crisis has refused to abate, and so it
is time to think afresh.
Interestingly, while the Central government is struggling with the bank NPA crisis, some states, including the recently elected BJP government in UP, have announced agriculture loan waivers for small and marginal farmers. No doubt there is an urgent need to help our drought and debt-hit farmers, but these measures seem more populist than sensible and may result in the benefits hardly reaching the intended beneficiaries as it was the case with the UPA government's mega loan waiver scheme announced ahead of the 2009 LS polls. In contrast, adopting a focused and well-planned series of actions can save a lot to the exchequer while providing a real relief to the poor farmers.
Meanwhile, there has been a lot of hue and cry recently over making Aadhar mandatory for PAN cards. The SC last week said that nothing prohibited the Centre using Aadhar for non-welfare schemes like PAN cards, a provision introduced by the Centre through an amendment to the Finance Bill to get rid of tax evaders who possess multiple PAN cards. While Aadhar today covers more than 111 crore people, it hardly makes any sense to now take any back step at this stage. In contrast, Aadhar can complement the government's bold anti-corruption moves and aggressive push for digital transactions in a big way in bringing the shadow economy into the mainstream to increase revenue for the government and funds for public utilities.
I invite your opinions.