Breach of convention Tackling defaulters
According to well-established convention, since April 2, 1952, three sessions of Parliament are held in a year — budget session from February to May, monsoon session from July to September and winter session from November to mid-December. The length of each session and the dates are the prerogative of the cabinet committee on parliamentary affairs. The Constitution mandates that the gap between two sessions cannot exceed six months. The violation of this well-established convention has often taken place in the hands of the party in power, whenever and wherever suitable. The United Progressive Alliance government violated it in 2008 by deferring the monsoon session. Now, the National Democratic Alliance government has called the session from December 15, thwarting the established convention.
It is a known fact that there are frequent disruptions and adjournments and even several sessions are washed out without transacting any business, burdening the taxpayers enormously. As a result, there has been a sharp decline in productive hours of Parliament. This session is expected to be stormy, as it would only have 14 sittings compared to 22 last year. Also, several serious issues including the Vyapam scam of Madhya Pradesh, goods and services tax and demonetisation are expected to be taken up by the Opposition, which are expected to have a deleterious effect on the Gujarat polls which the Modi government wanted to utilise to escape its parliamentary responsibility.
Not calling the session at the appropriate time weakens India’s parliamentary system and consequently the political system. If the decline continues unabated, and the executive becomes reckless and public opinion is ignored, the country will be in peril.
S K Khosla Chandigarh Although the recent amendments to the Insolvency and Bankruptcy Code (IBC) to prevent errant and defaulter promoters from bidding to reacquire their own enterprise’s assets is intended to speed up the resolution of bad assets, it is not without demerits. Instances of loans or credit facilities turning bad due to reasons beyond the control of the borrowers are not uncommon. The lack of professionalism of lenders, particularly public sector banks, and systemic weakness when it comes to judge and ascertain the various viability and feasibility aspects of the project, and accommodating external influence while granting credit facilities are factors from the lender’s side that are attributed to loans becoming bad. The economy is poised for growth and hence dynamic. It is always under the influence of global economic forces, and the cascading impact of the negative forces are creating stresses in many segments and adversely affecting cash flows.
Borrowers, who have excessively taken loans and siphoned off funds for other purposes and are deliberately withholding repayments, are turning the good money into bad. Thus, a combination of factors have contributed to the alarming level of non-performing assets. Generally, debarring all defaulters without considering the rationale behind the loan converting into non-performing asset is improper, will send wrong signal and negatively impact on the enthusiasm of entrepreneurs at a time when the government is giving paramount importance to start-ups. Depriving the genuine defaulter from bidding to reacquire own enterprise’s assets will be beneficial to the lenders as the possibility of getting a higher value can’t be ignored. Outside bidders, who take advantage of the situation, will manage to get the assets at lower prices. The chance of the promoter going for litigation to get back the assets are ample as no genuine entrepreneur who had taken risks would like to leave the assets.
Notwithstanding the need for rapid recovery of bad loans, it is essential to proceed selectively against the defaulters in order to avoid delay in resolution as well as to provide justice to genuine entrepreneurs who are contributing to the growth of the economy. Credit expansion and growth of private investment should not be hampered. VSK Pillai Kottayam