WARRIER''S BIWEEKLY REVIEW:: PEOPLE'S CONFIDENCE

Warrier’s Biweekly Review, July 29, 2018

I

People’s confidence

After some aborted attempts, the opposition in Lok Sabha could muster the numbers needed for moving a ‘No Confidence Motion’ which was debated in the Parliament for more than 13 hours on July 20, 2018. TDP joined one of the national parties the party saw as a co-accused in its criticism for voicing dissatisfaction about NDA government’s performance and moving the no-confidence motion. Telugu Desam Party MP Jayadev Galla who moved the motion and alleged that “both the national parties have crippled Andhra” couldn’t justify this. The public inference is that in the game of politics, numbers matter and the majority decides rights and wrongs.

Despite all these, Shri Galla’s speech in parliament made sense. But, the inadequacy of opposition’s homework came to the fore when their representative was given a chance to respond to Prime Minister Narendra Modi’s point by point reply to the allegations made by those who moved and supported the no-confidence motion. End of the day, the opposition representative made remarks about PM’s body language and spent the time granted to him by the speaker explaining why he needed more time, leaving the issues discussed during the day untouched! His response didn’t reflect coordination among the parties which supported the no-confidence motion.

Having said that, we have to give credit to the mature behavior of Lok Sabha after a long interval. Members from Treasury Bench and the opposition patiently sat through the proceedings which lasted hours longer than originally scheduled, listening to opposing views. One wishes, this becomes a beginning for peaceful interaction in both the houses of parliament in future.

Speaker Sumitra Mahajan rose to the occasion and helped the house to circumvent several situations which would have resulted in flaring up and affecting the smooth functioning of the house on July 20, 2018. But for her mature handling, the mention of Rafale deal or even Rahul Gandhi’s dramatic hug could have resulted in disruptions and adjournments.

Overall, this no-confidence motion should improve the confidence of the people in Indian democracy and its sanctum sanctorum (legislative houses). Political parties should accept this as a positive message and help improve the conduct of elected representatives at all levels.

M G Warrier, Mumbai

II

Interesting comparison

This refers to Krishna Kant’s story “Large exposure to PSUs hurts LIC’s returns” (Business Standard, July 19). One wishes, all stakeholders join-in and debate the resources management by GOI, state governments, PSUs, Banks, both in public and private sectors and other organizations which source public savings for their funding/business needs.

It would be fallacious to compare every investment with the equity investment in ‘Sensex’ shares. But there is a case for a reasonable positive return on investment of funds raised from the public, for the absence of which, there may be diverse reasons. The absence of functional freedom to work within the contours of mandated responsibilities stands in the way of professional funds management by statutory bodies and PSUs including PSBs.

For historical reasons, despite talk about non-interference in the internal affairs of statutory bodies and PSUs, GOI has retained ‘ownership rights’ over these institutions and ensured amenability of management, irrespective of changes in governments in Delhi. Right from board level appointments to the payment of remunerations/providing incentives to the junior-most employee in the smallest PSU, GOI directly or indirectly keeps a rein. These directly impact investment decisions like the one by LIC now being focused.

This leads to the issue of transparency in the directed deployment of resources. When comparisons are “Marked-to-Market” as in this article, governments too need to move away from dependence on captive pools like SLR funds, funds with LIC, Pension Fund with NPS administrators etc for market borrowings. Also, for public investments in GOI Savings Schemes like EPF, PPF, and G-Secs, interests should be made market-related. Maybe, where income patterns need to be protected as in the case of deposits by elders out of retirement corpus, there should be independent transparent arrangements.

M G Warrier, Mumbai

III

Cross-migration of resources

This refers to the report “LIC board gives nod to 51% stake in IDBI Bank” (Business Standard, July 17). Hopefully, other regulatory approvals necessary, for the LIC-IDBI Bank marriage to consummate, will not get delayed. Any delay will give room for hairsplitting analyses by media and legal experts about the pros and cons, sans any practical solution to the underlying problems surfacing. Public memory may be short, but there is the live example of Air India which has got admitted into the Multi-Specialty ICU of privatization lobby, with no hope of an easy exit route.  Though comparing Air India and IDBI Bank is risky, both have their common public sector tag. Air India too should have been allowed to revamp and remain within the public sector as the service the carrier has been providing will have to continue.

Last three years have been stressful for banks, government and the banking regulator. Not only because the efforts to cleanse the financial system from various chronic ills resulted in several weaknesses of the system surfacing or the rising demands on budgetary allocations to support ailing banks. The period also brought to light deficiencies and vulnerabilities in the management of institutions across public and private sectors. During this period the institutional system in the Indian Financial Sector has proved its resilience to withstand pressure and has retained public trust.

Banking being solely dependent on monetary resources, emphasis on ensuring capital adequacy, a reasonable growth in deposits base and flow of credit is natural. Sunil Mehta has arrived at a tentative figure of Rs800-900bn to resolve large toxic loans. There will be other demands, besides the likelihood of this figure too rising higher.

Extraordinary situations call for extraordinary solutions. Taking a cue from the observation that “…the returns on stressed assets are quite different from biotechnology, IT and private equity funds,” made by Sunil Mehta after submitting the report on measures to handle NPAs, GOI should consider tapping ‘idle domestic assets’ for long-term investment in the public sector.

Several individuals and organizations are holding assets in cash, gold and real estate, a part of which, if allowed to be mainstreamed and invested may partly cover the huge funding needs at this juncture. Of course, creating a national consensus and building public trust for the purpose will be a challenge worth chasing.

M G Warrier, Mumbai