Congress President Rahul Gandhi held press conference on August 30, 2018, and attacked the Modi government on a variety of issues including demonetization, NPAs and more. Leaving out the rhetorical parts of his address to the press, the main issues he raised and the facts on those matters are of interest to us.
Here is a factcheck of his claims.
Modi Govt caused NPAs to jump from 2 lakh crore to 12 lakh crore because it gave loans to crony capitalists.
Rahul Gandhi needs to refer to some figures given by Prime Minister Modi on the floor of the house in July this year. PM Modi said, “total amount loaned by the banking sector was Rs. 18 lakh crores in first 60 years whereas, under the UPA government (2008-2014), the total disbursement stood at Rs. 52 lakh crores. Indiscriminate lending to crony capitalists has led to the creation of huge Non-Performing Assets.”
Essentially, the amount of loans given from independence to 2008 were just Rs 18 lakh crores whereas between 2008 and 2014, in just 6 years, the UPA government gave out loans of Rs 34 lakh crore!
To see when the bad loans came about, let us look at the following graph from the Ministry of Finance.
Thus, it is obvious that if anyone helped the crony capitalists, it is the previous UPA regime, through its indiscriminate lending.
The present government, in fact, has been unearthing and recognizing NPAs. So, Rahul Gandhi’s argument is that the government that detected the NPAs is responsible for causing them whereas the government that created and hid them is not – this is laughable.
The present government is also recovering the bad loans through various legal frameworks:
- As soon as the NDA government came to power, it detected NPAs of Rs 2.75 lakh crores and by 2018, it unearthed Rs 9 lakh crore worth NPAs!
- Cases of large defaulters, with NPAs amounting to about Rs. 2.69 lakh crore exposure, have been filed before the National Company Law Tribunal (NCLT). Again, this was done by NDA, not UPA.
- Action has been initiated against 12 largest defaulters who had got loans before 2014 and whose NPAs amount to about Rs 1.75 lakh crore.
- 27 big loan accounts had taken loans between Rs 500 crore and Rs 1,500 crore – they make up NPAs of up to Rs 1 lakh crore. Action has been initiated even against these.
During demonetization, a Gujarat cooperative bank which has Amit Shah as one of its directors did something suspicious because Rs 700 crores were exchanged through it. This is a scam.
This false narrative has already been busted point by point.
The main points can be summed up as below.
- Of the total 16 lakh accounts with the DCCB, deposits/exchanges were made only by 1.60 lakh customers i.e. 9.37% of the total deposit accounts.
- Of these less than Rs. 2.5 lakh each were deposited in 98.66% of the accounts in which deposits/exchanges were made.
- Of the total accounts with the bank, it was only in 0.09% accounts where deposits of above Rs. 2.5 lakh were made.
- The average deposit amount in the Ahmedabad DCCB was Rs. 46,795 which was lower than average per depositor in 18 DCCBs of Gujarat.
- 1.60 lakh customers of the bank deposited/ exchanged demonetised notes aggregating to Rs.746 crore which was only about 15% of total deposits of the bank.
- Incidentally, demonetised notes presented in the DCCBs of Maharashtra were higher than those deposited in Gujarat, followed by DCCBs in Kerala.
- NABARD conducted 100% verification in the Ahmedabad DCCB which revealed that the bank had complied with all the KYC Guidelines of the RBI while accepting the demonetised notes.
- Every single exchange has been verified via KYC procedures.
Modi government’s intention is to destroy small businesses and help the big corporates.
Small businesses and MSMEs have been getting credit at a very good pace under the Modi government. 13.68 crore medium and small entrepreneurs received loans in 4 years of NDA under the MUDRA programme. More than Rs 5 lakh crore has been given to small and medium entrepreneurs.
On the other hand, Modi government has been making big corporates accountable. As our previous article Is Modi Government Pro-Big Business? notes,
- In May 2016, the Insolvency and Bankruptcy Code was brought in. It meant that banks would be able to foreclose on insolvent firms.
- The Code set up the Insolvency and Bankruptcy Board of India (IBBI) as the regulator on October 1, 2017. The National Company Law Tribunal (NCLT) was, of course, already in place.
- Empowered by the regulator and the action unfolding in government offices, banks too are recouping bad loans rather than simply extending them as in the past.
- There are more than 20 big businesses listed that are doing a firesale of their assets to repay loans that were given mostly during the UPA.
- There was a time when these companies got loans under the UPA and now, they are selling assets to repay loans under the NDA. Who is pro-big business again?
Demonetisation is a failure.
Demonetisation has brought in the following benefits:
- It was seen during demonetization that 1.5 lakh people deposited 33% of the total cash deposited. Demonetisation made those who deposited huge amounts of cash leave trails that can be tracked.
- The number of people filing income tax returns increased from 3.85 crore in 2013-14 to 6.85 crore in 2017-18. A widening tax base has been one of the main benefits of demonetisation.
- Money trails generated as a result of demonetisation have also to contributed in identification of shell companies. Based on subsequent action against these entities the names of around 3 lakh shell companies have been struck off from the Register of Companies.
- 3.09 lakh directors of such firms have been disqualified and restricted from operating the bank accounts of these companies.
- For those who ask what has the Demonetisation achieved, we have explained it through ‘eleven pillars of success’. Read our article Demonetisation: A Historic Success
- We have explained how digital payments were boosted by demonetization with the help of detailed graphs. Read our previous article Demonetisation – A Success for Digital Payments
- How the taxpayers base expanded post-demonetisation has been explained in our article Taxpayer Numbers Post-Demonetisation: Explained in Plain Words & Simple Graphics
- Is there a nil effect on black money by demonetization? Our article Quantifying the Impact of Demonetisation on Black Money gives you the answer.