Defaults, defaults & defaults, what is happening to India

For the last few years, we have been going through continuous defaults by corporates in our country. More than 10 lakh crores of NPA’s & more can come. It can be agreed that there will be a few weeds in any stack, while not all of them or major part them are useless, right. Kingfisher went down, Jaypee group sank, Jet Airways is now blinking towards a collapse, Air India is in the ICU since long & now recently the IL&FS default.

Does this mean that, as a country we are a population which is not fit to do business? We are 20% of the world’s population and are most of them useless? It makes us think about the condition in a different manner. Was there something that is forcing these corporates to not perform or giving them room to think of cheating the system?

IL&FS is saying that the Government did not pay them on time, even though the amount that it has to receive from the government is only about 17% of the total default of 91K crores. Yet, these amounts if they had come on time, it could have helped save some losses in the form of interests.

In the KFA case, we had the FDI issue which did not allow funds to come in and support the airline. Later that was relaxed, after the air line collapsed. Our system was adamant to not change until we had one calamity. This change made Jet Airways to forge alliance with Ethihad, now it has gone nowhere. Here what will be the reason? GOK.

Most of the infra projects that are draining huge amount of capital in various forms like capital infused, serviced borrowings in the form of interest. Capital expenditure lying unused losing value are due approvals and clearances where the government is involved.

In most of the defaults, if we go deep to find the root, it is the Government that is responsible in one or other manner for the collapse. Next question – why is government not able to deliver & has been party in creating so much loss of wealth. Are they not accountable?

Non- competence, irresponsible people in the system who are running the departments is the reason. Why did our Public Sector Banks go into the condition where they are now, devastated? Very low responsibility of the people who managed these banks, more than work, job safety was the bigger priority for the employees. Even the top management did not question.

Compare private banks with PSB’s, in private if target is not met he or she is kicked out in 3 months. In Public, one need not do anything, come at his or her convenience, do some work if they have time after their multiple tea breaks and chit chats.

The other day there was a service tax scrutiny in one of my known sources business premise. The chief officer who came from the department team was comfortable ordering tea and snacks for his team, getting temperature in the room arranged for comfort. Other than this work he did not do anything. They had a plan of doing audit for 2 days, fortunately it got completed half way through the second day. The whole team packed off to their homes after having lunch. Half day’s salary for the team is to be paid by the citizens of India.

In the same manner one of my other friend had some work to be done from the corporation office. At 11.30 am there is only skeletal staff in the office on a week day. Only 2 women employees in the whole office, one is dozing off on her desk & the other is busy with her kid. When approached to submit the application requesting some rectification work, it was said to give it outside and outside there were only tables and chairs, no human being. All of them are either out to have tea or are in the rest room.

This is the way our government departments work and we should not be surprised if a couple of lakh crores are lost from our system. Until the system is flushed out of these non-productive resources our country will continue to have defaults. Many of the smart brains either gets sucked into the same group or gets lost of all their life time effort.

I don’t say that all the corporates who lost money were genuine hard workers, there can be crooks in them too.

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Ramesh Sigamani

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