Rahul Gandhi Stuns All With His Knowledge Of Economics

According to a data by the Reserve Bank of India, the Narendra Modi government had written off much more loans than the amount of loans recovered. A report by Indian Express read:

“21 State-owned banks ended up writing off Rs 3, 16,500 crore of loans even as they recovered Rs 44,900 crore written off on a cumulative basis.”

While this is undoubtedly a good news for India from an economic perspective, Rahul Gandhi took a bit longer time to understand its crux. So, referring to this RBI data, the Congress scion accused the government of not extraditing the loan amount properly and tweeted:

“Modi’s India – For Common Man: Notebandi-line up and put your money in banks. All your details into Aadhar. You can’t use your own money. For Crony capitalists: Notebandi-convert all your black money to white. Let’s write off 3.16 lakh crore using common man’s money.”

Now, this post is enough to showcase Rahul Gandhi’s – the President of a major political party in India – lack of knowledge of economics. The Congress President, whose alma mater comprises of the Harvard University and Cambridge University, was unable to distinguish between writing off a loan and loan waiver. For general knowledge, banks tend to write-off loans to clear their balance sheets while the borrower still needs to pay the money. On the other hand, it is loan waiver which relieves the borrower from paying any more money. This lack of knowledge on Gandhi’s part (and, hence, spreading wrong news) prompted Finance Minister Arun Jaitely to take to his Facebook account and post what is meant by Loan Waiver. This is what he wrote:

This (loan write-offs) however does not lead to any loan waiver. Recovery of loans continues rigorously by banks. In fact the defaulting management of most insolvent companies have been removed under the Insolvency and Bankruptcy Code (IBC).

It may be noted here that the public sector banks in India earlier used fudgy means to hide loans. It was under the tutelage of erstwhile RBI Governor Raghuram Rajan that the apex bank of India forced the other banks to identify bad loans and use transparent methods of accounting practices. This also explains the exponential rise in bad loans between 2014 and 2018. Explaining the same, Finance Minister Arun Jaitely further said:

The main reason for this spurt in NPAs is that gross advances of PSBs increased rapidly as a result of aggressive lending from 2008 to 2014. Total loans outstanding of PSBs, which were about Rs 18 lakh crore till March 2008, increased to about Rs 52 lakh crore till March 2014.

However, in spite of not trying to understand the crux of this surge in NPAs and bad loans, all Rahul Gandhi is trying to do is spread wrong news all over media. In fact, instead of doing the same, Gandhi should give credit to Raghuram Rajan and Urjit Patel for initiating a massive central bank clean-up spree.

Courtesy: Rightlog.in

By: Shah on Wednesday, October 3rd, 2018