The Bhakts and the Econo-bhakts

The Bhakts and the Econo-bhakts

By: Amit Bhushan Date:30th Aug.2015

The old school political class in the country which seemed to be struggling just a few days ago seems to be back with a bang. It is well represented by the tornado of poll promises, which are nothing but more of the old promises of government doles towards 'infra projects' or 'social sector'. The leaders in the government continue to feel that merely 'enumerating' these promises by emphasizing upon the increased quantum are likely to do the trick and bring supporters/Bhakts (on vacations lately) back within the respective leadership fold.

We also have some other 'old school' mushroom folk who are trying to resurrect 'reservations' issue with media trying to sell the viewpoint that 'reservations' in a 'job surplus' state is still a big issue even amongst 'upper castes'. And these castes are keen to seek a rebalancing of opportunities as they do not have ample of it – a point if raised earlier might have curtailed some high flier way back. In fact, GOP & others not introspecting over the 'episode' seems a bit awkward.

We also have many noises being made towards various 'new' measures such river and near shore transportation, digital India, e-commerce or electronic assembly as part of make in India etc. etc. with government and leaders emphasizing that lot of policy streamlining has already happened and fructification of results is just around corner. Governments at center and state on their part, have attempted to liberalize labour laws, business rules and issues like land availability as well as initiated work sanctions for infra. However, most entrepreneurs would still lament that democratization of credit still eludes them and is one of the major problems why progress is slow.

The banking system continues to work in manner which favours large businesses. The banks partially fear that not catering to these big borrowers is likely to put the existing money at risk. They are also not sure about taking 'project' risk on small borrowers who lack other collateral and experience in managing sizable projects, unless of course they have the required political backing. Getting liberal often means losing out since the 'opportunity' structure can change, and post that recovery without help from government is almost impossible. Even now recovering from old borrowers is posing a big challenge in the changed spectrum and it almost mean getting ready for a huge 'haircut' in almost all cases, a scenario banks seem not to be ready while the political borrowers will not have it any other way. The system allows 'a few' to corner 'projects' (in old as well as new sectors) as well as required credit, and even manage political leadership who in any case have no interest to turnaround the situation. The political class on its account also knows its weakness and dependencies; therefore is keen to shut its eyes over such follies which in turn are beneficial to them professionally as well as personally.

Rather than debating the core and possible fixes for the same, our political news anchors in commercial news media are 'busy' with their usual hubbub such as matching tunes with pension lobbies; caste lobbies; 'special treatment request' for specific regions; external security as if a war is in anticipation etc.etc. Lo, the myth seems busted.

 

[Dhruv Bindhani]

The Bhakts and the Econo-bhakts

By: Amit Bhushan Date:30th Aug.2015

The old school political class in the country which seemed to be struggling just a few days ago seems to be back with a bang. It is well represented by the tornado of poll promises, which are nothing but more of the old promises of government doles towards 'infra projects' or 'social sector'. The leaders in the government continue to feel that merely 'enumerating' these promises by emphasizing upon the increased quantum are likely to do the trick and bring supporters/Bhakts (on vacations lately) back within the respective leadership fold.

We also have some other 'old school' mushroom folk who are trying to resurrect 'reservations' issue with media trying to sell the viewpoint that 'reservations' in a 'job surplus' state is still a big issue even amongst 'upper castes'. And these castes are keen to seek a rebalancing of opportunities as they do not have ample of it – a point if raised earlier might have curtailed some high flier way back. In fact, GOP & others not introspecting over the 'episode' seems a bit awkward.

We also have many noises being made towards various 'new' measures such river and near shore transportation, digital India, e-commerce or electronic assembly as part of make in India etc. etc. with government and leaders emphasizing that lot of policy streamlining has already happened and fructification of results is just around corner. Governments at center and state on their part, have attempted to liberalize labour laws, business rules and issues like land availability as well as initiated work sanctions for infra. However, most entrepreneurs would still lament that democratization of credit still eludes them and is one of the major problems why progress is slow.

The banking system continues to work in manner which favours large businesses. The banks partially fear that not catering to these big borrowers is likely to put the existing money at risk. They are also not sure about taking 'project' risk on small borrowers who lack other collateral and experience in managing sizable projects, unless of course they have the required political backing. Getting liberal often means losing out since the 'opportunity' structure can change, and post that recovery without help from government is almost impossible. Even now recovering from old borrowers is posing a big challenge in the changed spectrum and it almost mean getting ready for a huge 'haircut' in almost all cases, a scenario banks seem not to be ready while the political borrowers will not have it any other way. The system allows 'a few' to corner 'projects' (in old as well as new sectors) as well as required credit, and even manage political leadership who in any case have no interest to turnaround the situation. The political class on its account also knows its weakness and dependencies; therefore is keen to shut its eyes over such follies which in turn are beneficial to them professionally as well as personally.

Rather than debating the core and possible fixes for the same, our political news anchors in commercial news media are 'busy' with their usual hubbub such as matching tunes with pension lobbies; caste lobbies; 'special treatment request' for specific regions; external security as if a war is in anticipation etc.etc. Lo, the myth seems busted.

The article highlights the growing pressure on banks to restructure corporate loan books, which hold capital equal to the net worth of all banks. Despite this critical issue, media and political parties give it sparse attention. While SMEs generate more employment per credit unit and generally perform better, they lack political influence compared to large corporates, which donate strategically to maintain entry barriers and profits.


Banks have largely relied on existing corporate management for restructuring, perpetuating a vicious cycle. Political leaders avoid addressing deeper systemic reforms like management changes in troubled companies, preferring slogans over substantive solutions.


The author proposes a “salami slicing” approach—breaking down large projects into smaller viable sub-units for targeted management and restructuring. This would help isolate and manage bad assets, reduce overall risk, and encourage professional management focused on performance rather than political connections.


The article criticizes commercial media for ignoring the erosion of value caused by bad loans and urges greater scrutiny and innovative solutions in loan book management to protect lenders, depositors, and taxpayers.