1.14 lakh crore of bad debts: Jaitley's Make (believe) in India exposed

An RTI application by The Indian Express led to startling disclosures on Monday about bad debts of Rs 1.14 lakh crore written off by 29 state-owned banks between financial years 2013 and 2015 - much more than in the preceding nine years.

The Reserve Bank of India (RBI) showed that bad debts that stood at Rs 15,551 crore for the financial year ending March 2012, climbed to Rs 52,542 crore by end-March 2015.

The RBI did not report details of the biggest defaulters - individuals or business entities - whose bad debts of Rs 100 crore or more were written-off, arguing that "the required information is not available with us".

So vital information for the economy and policymakers is not available even for a scam of such horrendous proportions. Though the government has been trying to shore up public sector banks through the infusion of equity capital and other measures, the bad loans written off by these banks between 2004 and 2015 amount to more than Rs 2.11 lakh crore.

More than half of these loans, or Rs 1,14,182 crore have been waived between 2013 and 2015. The RBI data till 2012-'13 shows that between 2009 and 2013, advances by the public sector banks to individuals and business entities increased, and the bad debts written off by them doubled from 0.33 per cent of total advances in 2009 to 0.61 per cent in 2013.

The top ten banks writing off bad debts in 2015 (in rupees crore) were State Bank of India (SBI): 21,313; Punjab National Bank (PNB): 6,587; Indian Overseas Bank: 3,131; Allahabad Bank: 2,109: IDBI Bank Ltd: 1,609; Bank of Baroda: 1,564; Syndicate Bank: 1,527; Canara Bank: 1,472; UCO Bank: 1,401; Central Bank of India: 1,386.

When the write-off of bad debts of the top ten banks in the last three financial years (in rupees crore) is tabulated, the financial situation is even more grim.

The top ten banks in writing off bad debts in the last three financial years (in rupees crore) were SBI: 40,084; PNB: 9,531; Indian Overseas Bank: 6,247: Bank of India: 4,983; Bank of Baroda: 4,884; Canara Bank: 4,598; Central Bank of India: 4,442; Allahabad Bank: 4,243; Syndicate Bank: 3,849; Oriental Bank of Commerce: 3,593.

With public sector banks sitting on over Rs 7 lakh crore of stressed assets, including non-performing assets (NPAs) and restructured loans, RBI governor Raghuram Rajan has repeatedly expressed concern over the health of public sector banks.

But these figures give lie to the claims by Union finance minister Arun Jaitley that the foundations of the economy are strong. He would be right if the colossal debts of the public sector banks were not so astronomically high. And why was this information not put in the public sphere by the Union government?

NPAs of even the public sector banks were kept hidden from the public eye. Rs 1,14,182 crore invested in the social sector would have reduced poverty and boosted the market because of increased effective demand consequent on the rising incomes of the poor.

It would have helped the manufacturing sector, which despite the government rhetoric, is far behind China. But propaganda has displaced real statistics. The perilous state of the public sector banks also indicate that we are far from Make in India.

So public money of enormous amounts has been written off. The rich are relieved because huge funds investible for the poor are lost. As French novelist Balzac wrote, "Behind every great fortune there is a crime." The real slogan in India should not be Make in India. "Make believe in India" would be more accurate.