Chidambaram is trying everything he can to kickstart the economy-- Economic Times
MUMBAI : The finance minister will once again nudge public sector banks to put their best foot forward in an attempt to kick-start the economy in the forthcoming meeting with bank chiefs next week. P Chidambaram will meet select chief of PSU banks in Mumbai on April 8 with this agenda, officials from banking circle said.
Bankers are expected to urge finance ministry to nudge other ministries and government departments to clear pending projects - something that has delayed financial closure. This is one of the several attempts undertaken by the FM to give a boost to the economy. In a meeting held on March 18 with bank chiefs, the finance ministry had expressed concern about the delays in completion of projects that has resulted in the slowdown of the economy.
About 215 projects with an investment of Rs7 lakh crore are currently stalled, which is a "matter of worry," he had said. Banks have lent money to the tune Rs 54,000 crore, which is at stake until these projects are fully commissioned. The stalled projects are in sectors like power, coal, iron and steel and road transport. Even in the previous meetings with bankers since he took charge in July last year, the finance minister has been harping upon banks to take measures to improve investment sentiments.
For instance, at one point he said that banks should influence real estate companies to lower property prices, which would not only improve investment sentiments but also benefit the home loan borrowers. A senior bank official said, "The finance ministry is likely to invite select industrial houses along with bankers to have an open discussion on bottlenecks in financing projects and the way forward."
During the mid-March meeting, Chidambaram said that banks had sanctioned Rs 43,000 crore for 126 new projects which are estimated cost Rs 3.55 lakh crore. In the last meeting, Chidambaram indicated that the government has identified reasons for the delay in implementing projects and measures are being taken to address them.
The delays in receiving coal linkage, environment clearances, land acquisition have been cited as the key reasons that have delayed projects and also discouraged industrial houses from expanding. India's economy grew 4.5% in the third quarter of 2012-13, its weakest in the last 15 quarters.
RBI in its mid- quarter review on March 19 observed, "What is worrisome is that the services sector growth, hitherto the mainstay of overall growth, has also decelerated to its slowest pace in a decade. Capital goods production and mining activity continued to contract. In the agriculture sector, the second advance estimates of kharif production indicate a decline in relation to the level last year."
My Views:-----
Concept of sanction of loan and approval of big projects through a team of five or seven persons called as "Credit Approval Committee" will prove to be a failure . Lending decisions in banks are though taken by CAC or Management Committees or purchase committee or even Board of Directors as per guidelines issued by RBI and MOF last year,in practice the views of Regional heads or Zonal heads or Bank head prevails. In our country culture of High commands prevails either due to their poor knowledge or poor skill in expression or due to fear pshcosis
When we talk of cabinet decisions it is only the idea of High command of ruling party and a few ministers which is blindly endorsed by ohter ministers associated with cabinet in Parliament. Ninety percent of total Members of Parliament are silent spectator and they more often than not blindly follow the line of action dictated by a few powerful ministers constituting lobby around High command either due to their poor knowledge or poor skill in expression or due to fear psychosis..
Similarly all decisions in banks either on lending or for write off of bad loans or for approval of any bulk buy of goods and services are undertaken by a few powerful executives and other officials are simply signing on the place meant for them. Most of the officers act as rubber stamp as our President of India act as rubber stamp on all decisions taken by government of India.
This is Indian style of functioning where most of the executives do not have any say or do not have courage to put forward their protest on wrong decisions.Officers in general are bothered of their self gain, personal interest and own career upgradation.
There are hardly a few who really bothers for the organisation they serve. This is why flattery and bribery is more rampant in entire administrative machinery and the entire is system is therefore tagged a corrupt, inactive and ineffective.
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