Some good-old Socialism and free-market competition to the rescue
In 2016, I made this prediction: “Indian banks face tens of thousands of crores of losses whether the 1.5-lakh-crore Reliance Jio succeeds or not!” I should have mentioned lakhs of crores.
Now, it has all come true. Indian banks, mostly government-owned and saddled with NPAs ranging from defunct airlines to ‘ultra mega power projects’ to road PPAs to Chotta Modis (“Nirav”), had lent massive sums of money to mobile phone service companies. These operators had millions of customers but were operating on wafer-thin margins.
First, Anil Ambani-owned Reliance Communications became bankrupt. Now, Vodafone-Idea is about to default. Airtel has also borrowed huge sums of money and is no better.
Reliance Industries has said no to more borrowing. Reliance Jio has gone back on many of its promises. It wants to charge for the free things it promised earlier.
Banks, insurance companies and mutual funds are all in danger of contagion. Is there a way out?
Sure. Here is how:
- All existing mobile phone plans should be cancelled by Department of Telecom (DoT) and TRAI. A common pricing should be set by TRAI. For example, a mobile-to-mobile phone call should cost a fixed one rupee on all networks. The government specifies its cut for the spectrum and the rest should be shared by the two networks. As all mobile phone service providers in a telecom circle have to charge the same rates, there will be no price wars. Customers will favour the networks that provide the best service and the least annoyance. Market forces will then determine who wins or loses but not everyone will be at risk of going bust.
- There should be a flat yearly phone number rental charge for say Rs. 100, accruing to government and the network. Phone numbers with no usage (switched off with no presence on the network) should be frozen for a year and made available to new customers.
- To ensure that these operators do not infect the banking system, a portion of revenue from each call should be allocated for debt repayment, just like how the DoT charges for spectrum.
Every country needs its own manufacturing base to protect its sovereignty and to sustain a working class mainstay for the economy.
Tear up those free-trade accords and leave the WTO. Impose a blanket 20% customs/countervailing duty on all imports. Negotiate individual customs duty arrangements with countries willing to trade with the United States on an equitable basis.
Asking American companies to find an alternative to China is no different than asking them to move to Mexico under NAFTA. America will not be great again unless it returns to manufacturing.
As predicted by me foreign shills are peddling reports and op-eds claiming that NPAs can be eliminated if banks were privatized. It is as if private banks have not gone broke (GTB) or have no bad debts (ICICI, HDFC, Axis…). Even if some government banks are privatized the remaining banks will continue to be exploited by politicians and their influential friends.
The only solution is for government banks to be run by bankers not bureaucrats. And independent board should take care of corporate governance and monitoring.
Despite worsening fiscal situation, slowing economy & yawning trade deficit, Moodys pressured to give Modi a bone ahead of Gujarat elections.
Indian government has failed in everything. It cannot provide a guaranteed supply of water/electricity, good schools & colleges, health services, road and rail services… India is at the bottom of human development because of inept politicians/traitors/swindlers. Yet, somehow people here have strung together a living and Modi wants to spoil that – just to protect his masters’ investments on e-commerce companies.
Credits: The caricature of the fisherwoman is based on the actress Sanjanaa Singh.
After demonetization, the complicated GST has dealt a blow to manufacturing. Yet, World Bank finds India has improved in ease of doing business? Maybe to save Modi in Gujarat elections!
After GST was passed, Jaitley & Co claimed that Indian sovereign rating will be raised. Contrary to their previous claims of how important GST was, rating agencies let out a big yawn and drew attention to the fiscal deficit & asset quality issues in the banking system.
There is never any final set of reforms. There will always be new “urgent reforms” and pending bills. The goal posts will always be changing. Like asking dogs to fetch a stick, different political administrations will be given different task and different reasons. Old politicians will be cast off when their usefulness has been exhausted. Permanent reforms until the democracy has become part of a global fascist dictatorship.
Like loyal dogs, our netas are eternal optimists & are once again looking for more “good dog” taps on the head.
People in Gujarat are seething in anger over job destruction and crop losses. If Modi tries to use World Bank’s bogus talking-point ranking in his election talk, it will only cost him more votes. Of course, Israeli con artists will have to be called in again to tamper the voting machines.