Apropos ‘Pump priming the economy with credit’ (February 9), the economy definitely needs further financial support, especially MSMEs and the retail sector. The restructuring of big loans is the main reason for the reduction in gross non-performing assets (GNPAs) and the lowering of provisions. Recovery in stressed assets is still some way off. The suggestion to link loan repayments schedule to peak/non-peak business levels of the borrowing units has to be given serious thought by the RBI, especially in the case of MSME accounts.
The Covid pandemic has literally ruined the financial discipline of most borrowers, including those in the personal loan category and senior citizens. It is time the RBI once again rescheduled these loans, especially in the cases where salaries/pensions of the borrowers get credited to the bank accounts promptly. The huge NPAs are due mostly to willful defaults in the corporate sector.
Katuru Durga Prasad Rao
Hyderabad
Failure of SEZs
This refers to ‘SEZ 2.0’ (February 9). In India, special economic zones (SEZs) were set up to provide a hassle-free environment for exporters and to replicate China’s success in using SEZs to boost manufacturing and employment. But the policy has backfired. While the SEZ policy turned China into a manufacturing powerhouse, India’s failure has been led by its politicians.
Site selection is critical for the success of SEZs, but it has been guided by self-serving agendas rather than considerations of growth and development. Local politicians often influence bureaucrats at state-owned industrial development corporations to secure land for personal gains. As such, sites for SEZs are selected based on real estate speculation rather than the economic potential of a region. If not for profit through land deals, local politicians also use site selection to target specific ethnic and caste groups to create vote banks.
Add to this, State governments suffer from an ‘incumbency disadvantage’, where they hold office for shorter durations, which discourages them from pursuing long-term development of their region. In contrast, China’s local leaders have a greater incentive to develop more productive SEZs. Promotions of local leaders in China are often based on parameters such as GDP growth in their jurisdictions, which means they are more motivated to pursue local development.
N Sadhasiva Reddy
Bengaluru
Recast the model
Special Economic Zones (SEZs) were mooted in the year 2000 with a view to creating necessary infrastructure for manufacturing units with a special focus on promoting export-oriented activities and attracting FDI.
While the Centre is currently harping on ‘Atmanirbhar Bharat’ to have self-reliance and maximise the usage of indigenously manufactured products in every sector and make them compete globally, it is time the the concept of SEZ is re-visited, the performance of SEZs studied and their assets realigned towards atmanirbhar, thereby saving sizeable forex used for imports.
RV Baskaran
Chennai
Focus of PSBs
Since public sector banks (PSBs) are being either merged or sold off on the basis of not being profitable enough, why should they exhibit largesse towards MSMEs if they believe there is a risk in doing so. The fate of the Mudra loans disbursed some years ago were supposed to generate employment. Whatever is the fate of those loans and how many gained employment are unknown.
If the banks are to survive they need to forget about everything else but making profits. The government must decide on what they expect from PSBs. Banks cannot be expected to ride on two horses simultaneously.
Anthony Henriques
Mumbai
Stick to business
It refers to ‘Korea’s foreign minister expresses regret over Hyundai Pakistan’s tweet on Kashmir’ (February 9). What we have witnessed in the last few days from Pakistani franchises of Hyundai, KFC , Kia and Pizza Hut was unfortunate to say the least. These MNCs must not try to interfere in any political or sensitive matters. They should just be focussed on their business growth.
They should be aware about India-Pakistan relationship and how Kashmir is an integral part of India. Moreover, India is a much bigger market than Pakistan for each one of them, hence they should have thought well before putting any such comments on social media.
Bal Govind
Noida
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