Letters

Letters to the editor dated May 14, 2020

| Updated on May 14, 2020 Published on May 14, 2020

Good start

This refers to ‘A package, at last’ (May 14). The Finance Minister did address the needs of MSMEs, salaried employees and few other sectors. By reducing the statutory EPF contribution of both employers and employees, the government has provided more cash in hand. Reclassification of MSMEs and the financial package for both stressed and performing MSMEs, along with collateral free loans, will surely inject new lease of life in them. One of the most critical announcements was for the construction sector, as the six months’ extension for project completion will surely ease a huge burden. The ₹30,000-crore infusion into NBFCs should revive credit, but the government will have to closely monitor the credit off-take.

Bal Govind

Noida

Banking reform

With reference to ‘Why setting up a ‘bad bank’ is a bad idea’ ( May 14). Earlier, through the securitisation model under the SARAESFI Act, banks transfer their long-term quality housing and auto loans to ARCs, which in turn issue pass-through certificates to investors against underlying mortgaged and other asset-backed securities.

When such a quality tool, which was supposed to improve the liquidity and strengthen the banks’ balance sheets, itself proved to be a failure, the idea of setting up bad banks to deal with the bank NPAs may not be an appropriate solution.

Trading interest in the bond and security market is subdued now, with some mutual funds already announcing foreclosures. As aptly indicated, the lending by banks may not improve even if the bad assets are transferred , since bankers are presently busy with recent mega merger process. A new governance framework for banks may be a desired solution.

Sitaram Popuri

Bengaluru

Don’t look inwards

Apropos ‘Destination Aatmanirbhar Bharat’ (May 14). The concept of “Aatmanirbhar Bharat” is akin to Trump’s “Make America Great Again” in 2016, and the UK’s Brexit. Such inward-looking policies also signal de-globalisation, blows to international cooperation and a return to socialistic approach, wherein the government controls economy via ‘permit raj’. India has already paid a heavy price in terms of poverty alleviation and industrial growth prior to the 1991 reforms. The government should, therefore, focus on “Aatmanirbhar Bharat with Global Cooperation”.

Kana R Nambiar

Kannur

Prudent decision

Apropos “Telangana to tell farmers what to grow, fix crop area” (May 14). The move is a welcome step, perhaps long even overdue, and must be commended with all sincerity. With the Gram Panchayat system in place, the digitisation of land records and Internet connectivity penetrating every nook and corner of the rural, agriculture-based economy, it may not be difficult to implement this thought process. This concept must become a national movement and the Union government must initiate due process to make it a national policy to mitigate the farmers woes.

Rajiv N Magal

Hassan, Karnataka

Effective implementation

The government has unveiled a heavy revival package at 10 per cent of the GDP.What is of concern is that the government has chosen to push major reforms concurrently with deficit financing.

A number of enabling legislations would need to enacted to prop up the proposed reforms.In fact, even to push the stimulus, we need quite a few ordinances. A multi-faceted stimulus is now to be steered through a clutch of 53 ministries.

The need is for a master trouble-shooter. The Narasimha Rao reforms of the 1990s had Manmohan Singh. Modi’s reforms today would be better served through someone with the gifts of insight and pervasive intermediation.

R Narayanan

Mumbai

Unfair criticism

This refers to the comments made by P Chidambaram on the economic stimulus proclaimed by the Finance Minister on Wednesday. In the post-Covid context, the ₹20-lakh crore stimulus step for strengthening the economy is by any standard a praiseworthy step, and the comments by Chidambaram were misplaced. This is not the time for politics. This is a time when purposeful suggestions for enhancement of economic situation could be made which could be useful.

TR Anandan

Coimbatore

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Published on May 14, 2020
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