Narendra Modi’s reverse Robin Hood Syndrome
How long will taxpayers pay the Government to pay big business and to banks to bail out big biz? Why is the ‘corruption-free’ Government so weak-kneed against businessmen and banks?
What is the worst ‘Reverse Robin Hood Syndrome’ that comes to your memory? Well, you do not need to jug your memory much; the government of India’s recently unveiled ₹2.11 lakh Crore bank recapitalisation plan clearly takes the cake.
What is rather startling is that the broad spectrum of the media is also singing the official tune – that the capital stimulus for the public sector banks is part of the reform process kicked in by our ‘pro-poor’ government!
Imagine the Reverse Robin Hood Scenario: when the UPA government unveiled the Food Security Act (2013) that entailed an expenditure of ₹1.35 lakh Crore and that promised to take care of the basic survival needs of more than 70 Crore of the poorest Indians, the mainstream media raised the red flag – such ‘extravagant entitlement’ would ruin the economy.
Fast forward to the NDA government’s Bank Recapitalisation Policy in 2017: it would cost the taxpayer ₹2.11 lakh Crore and this money would be spent to bail out fewer than 700 big business houses which have disappeared with ₹7 lakh crore of public money advanced by the government banks!
And our mainstream media tells us that this is a giant step in the process of making India economically vibrant! The venerable Hindu’s editorial headline tells it all: “Pursuit of growth: Recapitalisation of public sector banks should set the sector well on the path to recovery.”
Can you see a more sinister example of crony capitalism, of reverse Robin Hood syndrome?
And what justification has been trotted for this capital infusion? That the banking sector has been stymied because of the Non-Performing Assets (NPA) overload and the only way to overcome it is by infusion of fresh capital.
Let us not forget: the so-called NPA (₹7 lakh crore) that has gone down the drain is taxpayers’ money; and the cost of Bank Recapitalisation (₹2.11 lakh crore) is also taxpayers’ money.
How does one ensure that the fresh induction of ₹2.11 lakh crore does not go the way of ₹7 lakh crore earlier – down the drain? Has the State taken enough punitive action against those who were responsible for the disappearance of ₹7 lakh crore from our banks?
That brings us to the central actors in this sordid saga. It is the sinister nexus between the big bankers and big business. Look at the major NPA cases; these are big business houses unveiling big projects for which our government bankers lined up to create a consortium and advance big loans. The business houses merrily diverted the money they received from banks to buy personal assets and refurbish their existing projects. After a point of time, they declared themselves bankrupt and refused to service the loan. That is how the NPA was created in the first place.
Mind you, the NPA has not been caused by the government banks being ‘forced to lend to the priority sectors such as small farmers and the small businesses’ as these bankers are often heard complaining. The fact is that the bulk of the NPA has been created by the active collusion between the top bankers and top businessmen to fleece the taxpayers’ money. It is a different matter that politicians and civil servants also took their cut to facilitate and sanction such siphoning off of public resources.
Why has Modi Govt let off bankers and business?
A government committed to end this big-ticket corruption ought to have taken exemplary action against both the businessmen and the bankers who colluded to swindle public money. It should have sent some of them to jail to set an example for the future. It should have ushered in a policy framework so that top bankers are held personally responsible for the multi-billion rupee transactions and top businessmen are made personally accountable for the loss of the big public money.
When the Chairman of the Syndicate Bank was caught accepting ₹50 lakh bribe from a businessman in August 2014, the CBI quickly moved in to probe his role in raising the credit limit of Bhushan Steel and Prakash Industries, two major players in the NPA game. That created panic among the bankers; if the CMD of the Syndicate Bank can be prosecuted for providing unsecured loan worth several thousand crores to these past masters in the diversion game, then the top bankers of other public sector banks would also come under the firing line. Hectic lobbying ensued and the government came out with a policy framework that the top bankers would not be personally responsible for business decisions that involved loss of thousands of crores of rupees to the exchequer.
With bankers ‘secure’, it was the turn of the business houses to seek similar personal immunity from prosecution for not repaying the loan. And the government of the day was generous enough to grant them their wish! It reinforced the policy framework for a corporate veil: if one business of a business house goes bust -- or made to go bust as a part of a criminal conspiracy so that the businessman will not have to repay the loan -- then his other profit-making businesses, to which often the original loan money advanced to the bankrupt set-up had been diverted, would not have to bear any responsibility.
So it was a win-win situation for both, the bankers and the businessmen. They could merrily play around with thousands of Crores of public money, without any accountability whatsoever. To further secure their position and, in the process, to further rob the poor taxpayer, the government came out with the Insolvency and Bankruptcy Code (IBC) that now ordains banks to initiate the insolvency process against big debtors.
And the invariable outcome of the IBC process is that banks are asked to take big haircuts. And the haircuts the public sectors banks have to undertake to bail out the fraudulent big businessmen have to be recovered from the law-abiding tax-payers of the country!
So the poor tax-payer is being asked to shell out another ₹2.11 lakh crore to cement this unholy nexus between the big business, big banker and big politics.
Can you find a worse example of ‘Reverse Robin Hood Syndrome’ in our history!