Who Says Bank Holidays Affect The Economy

Updated: May 19 2003, 05:30am hrs
A few years back, the All India Association of Industries (AIAI) calculated that out of 365 days in a year, a bank employee works only 161 days -- after privilege and sick leave of 30 days each, casual leave of 12 days, three bank holidays plus 104 Saturdays and Sundays. There is another estimate to show that all this is sheer non-sense and that bank employees work really hard. Accordingly, out of 365 days in a year, a bank employee works 180 days -- after privilege and sick leave of 30 days each, casual leave of 12 days, bank holidays as announced by the state government under the Negotiable Instruments Act and 52 Sundays. And one cannot blame bank employees if they are not allowed to work more by the unions, which feel that employees must go on short holidays with their families. Considerate unions plan strikes to coincide with public holidays!

Some uninformed folks say that such a large number of bank holidays affect monetary transactions and decision making, which have a serious impact on economy; that there is loss of production, an increase in attendant costs, and delays in meeting commitments in global trade. Some global companies and foreign investors -- they are all vested interests after all -- even say that the large number of holidays, in general, discourage foreign investment. Delays in cheque clearance due to a spate of holidays or strikes affect operations of stock, forex, commodities market and even ordinary people face difficulties in transactions. But these are all misplaced concerns.

Get this point: monetary transactions and settlements in forex, money and capital markets are only postponed due to holidays. They get done eventually! And as far as production losses are concerned, industries are also responsible for that. The All India Bank Employees Association secretary SD Dhopeshwarkar is bang on when he snaps: "Does not higher unutilised industrial capacity and closure of industrial units due to sickness affect production and its cost"

There are a large number of holidays in our country given its multi-cultural and multi-religious nature, for celebrating birth and death anniversaries of national and religious leaders. Reason in faith is more important than faith in reason. After all, we are trying to build temples in and of modern India.

Perceptive union leaders point out that even industry and employees of other government services are enjoying holidays on many of these days. "When bank employees demanded five working days a week, industry associations opposed the same. If the Indian economy is integrating with the international market on account of liberalisation, globalisation and privatisation, why cant we have five-day week like other countries have" points out a concerned union member.

Few understand that holidays are declared by state governments as per the Negotiable Instruments Act and bank employees unions or banks have no role in declaring holidays. States have their own holiday list. In Maharashtra, there are 23 holidays, Tamil Nadu 18, while West Bengal and Delhi have 17 holidays each. The allegation that it affects productivity of industries has no grounds as productivity largely depends on the efficient use of factors of productions such as capital, manpower and machine.

Moreover, defaults by corporates also impact productivity of capital in the economy and credit availability in the economy. "If bank holidays reduce manpower availability, then default by corporates also affect efficient utilisation of capital," Mr Dhopeshwarkar rightly points out. Holidays just postpone the transactions and bank employees do require holidays with their job requirements increasing with reduction in manpower in banking due to flab-shedding.

Again, more than 51,000 industrial units are closed in Maharashtra alone, leading to a huge productivity loss. The reasons for their closure and sickness have been often due to inefficiency on the part of company management. As far as retail banking is concerned, with the spread of off-branch banking system such as automated teller machines, holidays do not impact banking transaction needs of common people. Even the recent crisis at ICICI Bank was because the bank forgot to load cash: it had nothing to do with holidays! All that could have happened on a normal working day also.

It is also wrong to assume that just because there are so much holidays, folks are not being productive. When families sit and watch TV, munch chips and drink Coke at home, they boost demand. TRP ratings are important for TV channels. This, in turn, means that producers of consumer goods gloat about their products on channels. Many hire DVDs, go shopping, and all this is big news for retailers and banks. Retail banking gets a boost because more credit cards are used. Off-branch banking picks up. Banks actually cut down on operating costs.

Let us have more holidays -- banking or otherwise. An 8 per cent growth is a childs play!