Amid rising cases of wilful defaults and the furore over embattled liquor baron Vijay Mallya’s exit from India despite owing banks almost Rs 9,000 crore, finance minister Arun Jaitley on Monday said the Indian industry was fighting a “major battle” for its own credibility.
Industry captains must adopt a “positive” and “ethical” approach towards non-performing assets (NPAs), Jaitley said at the CII annual session. “Indian industry is also fighting a major battle for its own credibility... some recent events haven’t added to their credibility.”
NPAs are loans that do not yield returns. Gross NPAs of public sector banks increased from 5.43% as on March 31, 2015 to 7.30% as on December 31, 2015.
“I am quite conscious of the fact that an adverse business environment can lead to non-performing assets…..when the cycle reverses, the NPAs can also be reversed... but the approach of the leaders of the industry will certainly have to be always positive and ethical because it is that approach which is going to add to their credibility,” Jaitley added.
There are over 7,600 wilful defaulters in India, who owe around `66,190 crore to various public sector banks. Of these, suits have been filed in 6,816 cases and FIRs have been lodged in 1,669 cases.
Stating that the government has taken several steps to address the NPA problem, Jaitley said, “In the last one year, pro-active steps have been taken as far as steel industry is concerned, the revival of highway industry is concerned, the sugar industry is concerned, the step which has been taken in power sector, each of these will lead to better consequences as far as these sectors are concerned in coming one year.”
Underlining that in the long run both deposit and lending rates must be reduced to make the economy more competitive, the minister said debates on crucial economic issues, including interest rates, should move in the right direction in India, which has a “large and noisy democracy.”
“The government and the industry will have to put their heads together, work in tandem to address each of the sectoral concerns. Obviously, those sectoral concern have a fallout on the overall economy,” he said.
On private sector investments, Jaitley said: “Hopefully, this year the private sector investment and business environment will improve. In the coming year, you (industry) lead...rather than the government. That will be the ideal state for the Indian economy.”
(with agency inputs)