Is greed good?

A more caring India would provide for Universal Basic Income

An unpalatable reality is that the effectiveness of the 2016 Insolvency and Bankruptcy Code has been whittled down systematically over the last few years. Former Reserve Bank of India governor Urjit Patel’s book, Overdraft: Saving the Indian Saver, details the extent to which huge debt defaults to public sector banks (PSBs) were glossed over by the government and the RBI till about 2015. Subsequently, a February 12, 2018, RBI circular made it mandatory for lenders to take defaults of over Rs 20 billion which remain unresolved for 180 days to the National Company law Tribunal (NCLT). Owners of defaulting large firms who risked losing their assets have often retained control using all manner of legal strategies. A self-serving logic used was that even those firms that could be revived would be shut down under RBI’s 2018 order and lead to workers being retrenched. On balance, the Ministry of Finance (MoF) has sided with defaulters and so did the Supreme Court when it struck down the 2018 RBI circular in April 2019.

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