Opposition punches hole in govt's claims on bad loans, black money

CPI (M) chief Sitaram Yechury said Arun Jaitley's clarification in Rajya Sabha on NPAs was incorrect and accused him of having misled' Parliament

The Congress and Communist Party of India (Marxist) on Friday questioned the Narendra Modi government's claims on its crackdown on 'black money' and also highlighted its poor record on recovering bad loans, or non-performing assets (NPAs), of the banking sector.

Arun Shourie, a former Bharatiya Janata Party (BJP) member, told news channel NDTV that the government failed to anticipate the distress its decision would cause in remote areas. Asked if demonetisation was a bold and radical move by the PM, Shourie said jumping in the well or committing suicide is also very radical. A minister in the Atal Bihari Vajpayee-led government, Shourie said a beginning could have been made by reforming the tax administration.

CPI (M) chief Sitaram Yechury said Finance Minister Arun Jaitley's clarification in the Rajya Sabha on Wednesday about NPAs was incorrect and accused him of having "misled" Parliament. On reports that the State Bank of India has written off bad loans worth Rs 7,000 crore, including Rs 1,200 crore of industrialist Vijay Mallya, the Finance Minister had said it was incorrect to term it a "loan waiver".

Jaitley had said the bad loans continued to be on the books of the bank, and the bank would continue to make efforts to recover it. But Yechury, quoting former Deputy Governor of Reserve Bank of India (RBI) K C Chakrabarti, said there is no incentive for banks to pursue recovery of a bad loan if it is no longer on its balance sheet. The CPI (M) chief advised Jaitley to read the RBI guidelines on the issue.

Yechury said Modi government's efforts to recover bad loans are poor. He said the government has recovered Rs 1,12,078 lakh crore of bad loans since 2014. But its lack of intent, Yechury said, is exposed by the fact that the conviction rate of loan defaulters was a mere 1.45% in 2014-15, which further declined to 1.14% in 2015-16.

Congress Rajya Sabha member Jairam Ramesh said the government move will impact the rural economy for the next 12 months. He said the Modi government, according to a reply to a question in Parliament, has recovered Rs 1.25 lakh crore black money in the last two years. Ramesh said the Congress-led UPA government's track record was better. It unearthed Rs 1.31 lakh crore of black money in its last two years.

Ramesh also questioned the government claims that demonetisation is mainly aimed at checking the fake currency. He said the fake currency is not more than Rs 500 crore, or 0.02 %, of the total black money.

The two parties also said the government has mismanaged the situation. Its confusion being apparent in the way it has repeatedly changed exchange limit of currency notes and its failure to recalibrate ATMs have exposed the PM's claim of a 10-month long preparation.

Shourie said the PM was carried away by a big idea and got into a self-image that he needs to some or the other 'surgical strike'. "They have got into this cycle of surgical strike business," he said. Shourie, who has been critical of the Modi government, said demonetisation was akin to wielding an axe to remove a mosquito sitting on your nose. "You have to do a lot more on black money? I am all for it but this is not the way to go about it," he said.

READ OUR FULL COVERAGE ON THE MODI GOVT'S DEMONETISATION MOVE