The MGNREGS seemed to be a good scheme to give employment to the rural folk, especially women, giving them some money in their hands to support their families. But defects have surfaced since the year it was introduced. The need now is to have corrections made to make it sustainable and, at the same time, growth-oriented. The edit Teach them to fish (FE, April 22) is timely and points in the right direction to make it more fruitful. As far as agriculture is concerned, we are leaning more and more towards mechanisation and technology to reduce costs and increase productivity. MGNREGA is to be made not only flexible, but also be aligned to industry needs, say MGNREGA work can be used to build rudimentary infrastructure. In due course it has to contribute to industrial growth and vice versa. The government needs to provide full employment, better wages and better living. The change has to come slowly and steadily.
ARCs are no relief
Apropos of the column Utilising ARCs effectively (FE, April 23), asset reconstruction companies (ARCs) have become conduits for banks to green their balance sheets. As the writer has rightly observed, ARCs mechanism is not a boon to banks attempting to wash off their dirty assets. It comes at a price in the form of heavy discounts. Given the continuous pile-up of non-performing assets (NPAs) in state-owned banks (SoBs), there is a possibility that ARCs would be saddled with such bad assets with no prospects of immediate recovery. Further, the legal system in India is notorious for delays and is cumbersomeeven ARCs would get disappointed with the recovery process and would seek bail-outs from the ex-chequer.
Transfer of sticky loans to ARCs is just a "transfer game". It cannot be cited as an achievement for cleaning the banksbooks. Further, what happens to the accountability issue Banks seem to close the issue of accountability once those bad assets are sold to ARCs. The top management is therefore keen on selling the NPAs to ARCs even while writing off losses due to discounted receipts. Further the banks receive only 5% cash and the balance in the form of securities. The sale does not improve the liquidity position of banks. All such transactions are book entries and it is difficult to track these items for purposes of assessing real recovery.
Apropos of the column Bleeding fisc (FE, April 22), it has been brought to the fore that how far the incoming government has to strain itself to set right the fiscal disorder left behind by the UPA. Removing unnecessary subsidies given out for populist concerns, trimming government expenditure, increasing the tax revenue are the immediate steps to bring back fiscal discipline. Any government assuming office after May 16 has to take some drastic steps of fiscal prudence. The government has to be very cautious in the implementation of the Food Security Act which will cause a major rise in deficit. Also, the El Nino effect, which may cause a shortage of rainfall, has to be taken into account. Before pressing RBI for a rate cut to tune up investment, fiscal disorder must be brought under control by the government. Drastic measures taken may irk the public, say by those who stand to lose if the benefits from populist schemes are cut. The government has to be visionary rather than worry about votebank losses.
NR Nagarajan, Sivakasi