Tip of the iceberg.

Seems that restructured loans for Public Sector or government banks was Rs 2.18 trillion in the last financial year, up by 58.48%  compared to 31 March 2011. TOI, 31 October. Banks restructure loans by extending the time limit for repayment by giving new loans to cover old ones. This hides the extent of Non Performing Assets, or bad loans in bank-speak, on their books. PS banks have restructured 5.7% of their loans as against 1.6% by private banks. Till 30 June 2012 the Corporate Debt Restructuring cell, a bankers' forum which decides on restructuring, received 400 applications for restructuring loans amounting to a total of Rs 2.27 trillion compared to Rs 958.2 billion as on 31 March 2009. Loans have been given against dubious collateral such as personal guarantees, brand value or trademarks which will be hard to collect. The ratings agency Crisil warns that restructuring will add another Rs 500 billion to NPAs. Government debt stood at Rs 39 trillion in the last quarter, up 3.6% compared to the previous quarter. The Current Account Deficit was a record 4.9% in the June to September quarter. The combined budget deficit of state and central governments is about 9% of GDP. This may explain why the Reserve Bank did not reduce interest rates at its meeting yesterday. The RBI wants the government to reduce spending and limit indiscriminate corporate borrowing. What no one talks about is the gigantic property price bubble hanging over the economy. Mumbai has Rs 1 trillion of properties lying unsold. Reducing interest rates will inflate the bubble by increasing property prices thus adding to the black money and inflation. This also explains the howls of anguish by politicians and business fellows. Politicians want a huge amount of cash to campaign for the coming general elections and business fellows want to unload their stock of over-priced properties on the gullible public. Former Finance Secretary, Vijay Kelkar said," Last year we had fiscal deficit of 5.8% of GDP and CAD of 4.2%. If this continues the CAD would go up to 4.3% and fiscal deficit to 6.1%this year. So options are either we boost exports, draw down our reserves or borrow from the world. At CAD of 4.3% we would need to borrow $80 billion alone. Then short term debt will need rescheduling which would need further refinancing. Such a trend would be unsustainable." ET, 1 October. He then says,' The Gangotri of growth deceleration and macro economic problems is the continued high fiscal deficit which also leads to high inflation. So we need to take corrective action swiftly." In short the World Famous Economist has made a massive cock-up of the economy. On the other hand, maybe the RBI is waiting to reduce interest rate by 0.5% in the next quarter to allow the government to borrow massive amounts in the next years budget to bribe the " vote bank " and go for elections in 2013. Any skullduggery is possible.