Speaking at Off the Cuff, Sinha says Modi government has put in place drivers of robust growth in future.
New Delhi: Resolving the issue of non-performing assets plaguing public sector banks has been the biggest challenge for the Narendra Modi government, Minister of State for Civil Aviation Jayant Sinha said Friday.
Speaking at ThePrint’s Off the Cuff in New Delhi, Sinha, who was earlier associated with the finance ministry, described the NPA problem as a ‘hydra-headed’ monster without a simple healing prescription.
Sinha, however, added that the BJP-led National Democratic Alliance (NDA) government has put in place the drivers of robust growth in future and will be remembered for its thrust on social security.
“NPAs have been like the hydra-headed monster because they represent challenges across sectors and many institutional failures, so there is no simple cheque you can write and solve those problems… You have to go sector by sector and fix a lot of underlying problems that have led to these problems,” Sinha said.
He added that the issue is something that can often take even a decade to resolve.
Sinha was in conversation with ThePrint Editor-in-Chief Shekhar Gupta and Associate Editor Ruhi Tewari.
Sinha said the government now has a good grip on the problem and has done a lot to deal with the underlying structural issues.
“It is a bounded problem now and we have got it under control,” he said.
Sinha added that while the government has done a lot to resolve this problem, which resulted due to the reckless lending under the previous United Progressive Alliance government, he wished a lot more could be done in this area.
“The banks are lot healthier in their lending practices. The phone-banking is over,” Sinha said.
He added that the small ticket Mudra loans, which the government has been pushing banks to sanction, will not add to the NPA problem.
Recently, in a note to the Parliamentary Estimates Committee on bank NPAs, former Reserve Bank of India (RBI) governor Raghuram Rajan underlined the need for the government to focus on sources of the next crisis and “not just the last one”. Rajan said both Mudra loans as well as the Kisan Credit Card, while popular, must be monitored closely as they pose risk to the banking sector.
Sinha pointed out that several structural reform measures have been put in place including the National Company Law Tribunal (NCLT) to address the bankruptcy process. He pointed out that recoveries have improved significantly with underlying stress in sectors such as road, power and telecom easing.
He said the Modi government has dealt with the “overhang” issues and put in place growth drivers for the future.
“We have dealt with a lot of the overhang — the macro that was spilling out of control, growth that was not happening, crony capitalism that was sort of cancer on the economy. We have got rid of them but more importantly we have put in place the drivers of robust growth in the future,” Sinha said.
Sinha said that any agency, including the rating agencies and the World Bank or the International Monetary Fund (IMF), will give high marks to his government for putting in place structural reforms for future growth as well as its focus on social security.
“When history is written, any objective agency is going to look at the social security,” he said.
He said programmes such as Pradhan Mantri Jan Dhan Yojana, Ujjwala Yojana and Swahch Bharat will go a long way even as the government recently kicked off the much-hyped national health protection scheme — Ayushman Bharat.
“The social security platform that we have created for this country, that I think, history is really going to remember,” Sinha said.