Claiming that the Indian banking sector is "much stronger" than before, Prime Minister Narendra Modi urged bankers to lend without fear. "Questions will not be raised on the genuine business decisions taken by bankers. To reduce the pressure from the banking sector is also government's job. If bankers are under pressure, then they will not be able to take decisions. I am not one to run away from responsibilities." Very admirable. But what happens if there is a change of government in 2024? What if a loan given now turns bad and a new government decides that it was a case of "telephone banking", as alleged by Modi against the Congress?The former Finance Minister P Chidambaram has just been released on bail after 3 months in Delhi's Tihar jail on charges of corruption. Chidambaram naturally took a dim view of the allegations, and claimed that the case is "politically motivated and an act of vendetta". Responding to charges of political vendetta, Union Minister Nitin Gadkari said, "We have never been vindictive, on the other hand when P Chidambaram was Home Minister during Congress rule, he filed false cases against me, he also filed false cases against against Prime Minister Narendra Modi and Amit Shah. Later we all were proved innocent." So all this is just friendly joshing to entertain people, but a bank official caught up in political tit-for-tat will not see it as a game. Charges of corruption are investigated by our premier investigating agency the Central Bureau of Investigation (CBI). Just one year back the Director and the Special Director of CBI were investigating each other on charges of corruption. But, even if some banker is completely fearless, who will he lend to? "The core of our manufacturing economy is staring at an abyss," according to Sandipan Deb. After the Supreme Court cancelled all 122 telecom licenses in 2013, most companies gave up business in India, leaving just 3 companies behind. Now Bharti Telecom is looking for funds from foreign companies which may take control from out of its hands. The total debt of the 3 telecom companies still operating in India is a colossal Rs 3.9 trillion, so why any foreign entity would be interested in buying a stake in Bharti is not clear. The only foreign company still hanging on in India is Vodafone which posted a loss of $7 billion in the second quarter. The main reason is that the government grabs a large chink of revenue and taxes the rest, leaving nothing for the company. Even with the sword of bankruptcy hanging over the companies the tax department has ordered them to pay their share of revenue. Modi may not run away but companies might. Taking economic growth with them.
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