How to destroy the Indian Economy? Poonam Gupta and Arvind Panagaraiya prescribe By Thomas Franco | August 2, 2022 https://www.cenfa.org/how-to-destroy-the-indian-economy-poonam-gupta-and-arvind-panagaraiya-prescribe/ Poonam Gupta and Arvind Panagaraiya prescribe the solution they give is to privatise all banks without looking at the failure of private banks which are only for profit. Between 1947 and 1951, 205 private banks went out of business. Between 1951 and 1967, 476 private banks went out of business. Between 1969 and 2008, 36 banks were taken over by other banks, most of them by public sector banks. In the US, 512 private banks failed between 2008 and 2020. Global Trust Bank, Centurion Bank, and the Yes Bank had to be saved by public sector banks only. ..
Deposits and credit have grown because of the public sector banks. But, due to the merger, prompt corrective action and the threat of privatisation, the gains earned are being taken away. This has accelerated after 2014 during which period the authors have been at the helm of the affairs and they are the ones to be blamed. While mentioning the rise of private banks, the authors have carefully avoided the takeover of failed private banks by public banks from 1969 onwards. Again most of the mergers were with public banks to save the failing private banks. The new private banks like ICICI Bank, AXIS Bank, and HDFC Bank which are the largest private banks with government support are not mentioned by the authors. When there was a problem with ICICI it was the SBI which saved it. Even in future, these same experts will ask the government to save the private banks which fail due to mismanagement and fraud. That’s what happened in the US too.
In short, as per the authors, all banks should be privatised, starting with Indian Bank, Bank of Baroda and Canara Bank. The government should not have any control, CVC should not investigate, RBI should become a mega ruler (who will dance to the tune of the political bosses as the directors have no accountability) and Corporates should have the right to run banks like they run NBFCs and foreigners should be welcomed to own our banks as they will bring innovation.
The small household depositors who have 62.63% of the total deposits and 81.17% of the savings deposits will lose their deposits over a period of time. 14,045 big borrowers who have Rs 35,12,801 crores (29.5% of all credit) of the outstanding loan can default and ruin the banks. Small borrowers will go to NBFCs and MFIs, will pay huge interest, default and lose their assets. Of course, there will be no reservation in employment. Basically, the economy will collapse. IMF and World Bank will rejoice. Ambadani or someone will become the official or unofficial dictator. Poonam and Panagaraiya will live happily abroad.