Amidst the prevailing holocaust caused by the devastating effect of the Corona
Virus spread globally, yet another impending threat of recession is looming
large over the entire world affecting the world economy which if not treated
effectively is going to impact the lives of the people. The world has faced the
problems of recession from time to time. But it is perhaps for the first time
that it faces global lock down and its resultant impact is not known. A Pandora
Box is already opened as to how we are going to manage the ensuing financial
constraints to be faced on account of the lock down.
Government of India has already initiated remedial measures to tackle the
anticipated adverse effect of the impending threat from the global lock down.
Special expert group has been formed and further action plans are expected to be
implemented as per the recommendations of the expert group.
While government has
started implementing its plans and programmes to effectively face the
consequences of the effect of the lockdown, it has become the inevitable need of
the hour that the doyens of industries and commerce of the large and
extra-large, the entrepreneurs belonging to the MSME sector and all members of
other types of business communities and RBI and also the banks and all financial
institutions have to come together to take stock of the situation and implement
such actions as may be necessary to successfully withstand the pressure and
stress that may be triggered by the ensuing recessional impact and help the
government to tide over the impending spillover of the global and local lock
down and for their own survival and subsequent progress and revival of the
While the large and extra-large industries have the resilience to tide over the
catastrophe, it is the enterprises coming under the vulnerable sector of MSME
that are going to face the wrath of the impending disaster. The Indian financial
sector and industrial activities are already under stress because of the
economic slowdown and liquidity problems and such being the case the economic
revival and rehabilitation is going to very tough.
The economic recovery can be
stimulated only if the government, the industries and commerce and the banks and
financial institutions appreciate their respective roles complementing each
other and understand the complexities and the financial requirements in their
correct perspectives to encourage growth, remove impediments, to create an
environment of ease of doing business and to help realise their respective
The immediate outcome of the anticipated economic recession is its effects on
the susceptible MSME sector Enterprises creating more non-performing assets on
account of failure to fulfill their financial commitments to the banks and
financial institutions and other creditors on account of global lock down
severely affecting their cash flow.
The following steps are to be initiated
immediately to withstand the challenges of the devastating effect of the
national and global lock down:
- The government should announce fresh economic revival package including
allotment of funds particularly for the vulnerable MSME sectors to tide over the
liquidity crisis. This is apart from the steps already announced.
- The mobilization of funds by the government to meet the unprecedented
exigencies coming out of the current crisis should not be at the cost of tax
paying citizens and the general public.
- The global lock down impact may see a new paradigm shift in the
universal investment climate which may favour India to become the global
investment destiny for which the government should initiate steps to create
favorable investment avenues with ease of doing business by reducing
red-tape impediments and bureaucratic interference.
- Reserve Bank of India must instruct All Commercial Banks (including
Small Finance Banks, Local Area Banks and Regional Rural Banks), All Primary
(Urban) Co-operative Banks / State Co-operative Banks / District Central
Co-operative Banks, All All-India Financial Institutions and All Non-Banking
Financial Companies including Housing Finance Companies to reorient their
approach to their borrowers particularly coming under the MSME sector with regard to lending
and recovery of debts by formulating practical and pragmatic schemes to support
the enterprises by reassessing and reappraising their financial needs to tide
over their liquidity problems to keep their accounts as standard. If necessary,
longer moratorium period and longer repayment tenure may be given based on the
realistic cash flow after absorbing the shock of the global and local lock down
besides providing adequate working funds.
- Reserve Bank of India has already issued Schemes for Sustainable
Structuring of Stressed Assets and Prudential Framework for Resolution of
Stressed Assets which the banks and financial institutions are mandated to
strictly implement the stressed assets resolution programmes. RBI should also
ensure that their instructions are effectively implemented without fail and any
of the bank or financial institution violating the instructions should be dealt
with severely since it id found that many of the banks and financial
institutions do not comply with the instructions and take advantage of the
ignorance of the borrowers on banking matters. It is the duty and responsibility
of the banks and financial institutions to educate the customers in the matters
of law and practice of banking so as to create better understanding and trust
between the lenders and the borrowers which will enable to reduce the trust
deficit presently prevailing between them.
- RBI should instruct all the banks and all financial institutions to
review their ongoing legal proceedings to recover the debts and to undertake
fresh attempts to revive and rehabilitate such accounts who are the victims
of circumstances beyond their control and nurse them back to good health by
implementing multiple rehabilitation, if need be, as per RBI notifications
for which RBI can issue in consultation with government guidelines to impose
a stay of all ongoing legal proceedings. The legal proceedings should be the
last resort after exhausting all other means of rehabilitation/ repeated
rehabilitation / restructuring / recoveries by way of One Time Settlement.
- There exists another set of unfortunate and neglected borrowers who have
availed housing loans, educational and consumer loans etc. The repayments of
most of the loans are to come from the salaries of the borrowers and the
repayment of educational loan is to come out of the prospective job
availability. The plight of the unfortunate borrowers who lose their jobs
due to reasons beyond their control like retrenchment and face salary cuts
on account of recession along with non-availability of jobs which is posing
one of the greatest threats to the generation next are to be looked into by
the government and some remedial scheme like credit guarantee for such loans
should be formulated.
- There is another set of people whose plight is not taken care of nor not
even thought of, are those who lose their jobs and livelihood on account of
stringent action taken by the banks and financial institutions to recover
their dues. Many including entrepreneurs are the victims of such drastic
actions rendering them jobless and depriving them of their earning
opportunities. Banks and financial institutions should reorient their
approach to recover their dues with a human touch considering the impact of
such recoveries on the economy and GDP of the nation. Government and RBI
also should find ways and means to minimise the collateral damages and losses on account of such drastic actions.
But wilful defaulters are to be dealt with severely.
What are required for the present?
- The government should furthermore create and strengthen the atmosphere
of Trust, Faith, Hope and confidence among people that unitedly this
nation can face the challenges and come out of the present and anticipated
crisis leading towards progress and development to become the formidable force
on the economic front overtaking China.
- History teaches us great lessons to be learnt and we have the
transformation of Japan and Germany as world economic powers after the
devastating effect of world war II. Every catastrophe creates an
opportunity. Hardships come to make life better and not bitter. Let our
nation find opportunity in difficulty and not difficulty in opportunity for
which the government should take resolute decisions on economic front
unmindful of the political repercussions but without inconveniencing and
creating hardships to the tax payer and common man and implement them
effectively at all levels duly monitored and corrected if necessary, based
on the result achieved.
- The government should take into confidence the opposition parties and
initiate discussions with them and the opposition should reciprocate
positively by shedding their blind hatred towards the government. Further
the government should consult experts on economy and entrepreneurs of the
industry and commerce and seeking opinions and participation from the
general public to formulate dynamic policies and implement them through
delegation of power with sincerity of purpose and time bound action coupled
with effective monitoring of the implementation and progress made and take
course correction, if need be.
- The interest and survival of the migrant workers, daily wagers, marginal
agriculturists and other vulnerable sections of society are to be taken care
of and protected by adopting various policies to mitigate the hardships
faced by them based on the experiences so far gained.
- All political entities, state governments and the central government
should come together and take unified actions and extend mutual co-operation
and work in unison keeping national interest above all other interests to
bring order out of chaos to take the economy to a challenging level to
become one of the formidable economy of the world.
Last but not the least, the following is an appeal to the political parties,
civil servants, civil society and the ordinary citizens of this country.
If we scan the pages of history, we find that India was a country consisting of
more than 500 princely states though possessing common heritage, culture, values
etc but having different languages, traditions, customs and belonging to
They never stood united as a nation. There was no unity among
the then princely states who were fighting among themselves to establish
superiority over one another which paved the way for the foreign invasions first
by the Muslim rulers and then the British. For nearly 1000 years this heritage
country was subjected to plunder, destruction and subjugation and annihilation.
It was only during the independence movement that we started thinking like a
nation when Mahatma Gandhi assumed the leadership and harnessed the power of the
people and united them to fight for their SWARAJ leading to independence in
On 26th day of November 1949 the Constituent Assembly adopted, enacted and
gave the people of independent India, that is Bharath, the Constitution
enshrining human values, cherished principles and spiritual norms upholding the
dignity of man and also incorporating in solemn form the ideals and inspirations
which inspired the country in its struggle for independence. It became a
Constitution of the people, by the people and for the people proclaiming Justice,
Liberty, Equality And Fraternity.
But unfortunately, since then the letter and spirit of the Constitution were
compromised and eroded and fissiparous tendencies started showing their
presence. Political expediency took over the reigns and the country started
getting divided because of bitter political rivalry and started division in the
name of castes, religions, regions, languages, social standings tearing the very
fabric of Constitution. New set of privileged people emerged based on their
political, social and bureaucratic standing.
The underprivileged, the lower- and middle-income groups of people were
neglected, negated and side lined. Their lives became:
A crest of bread and a corner to sleep in,
A minute to smile and an hour to weep in,
A pint of joy to a pack of trouble,
And never a laugh but moans come double.
The aforesaid state of affairs is to be arrested so that ordinary and under
privileged people are provided with opportunities to lead a decent life devoid
of stress. It is high time that the fissiparous tendencies should be stopped and
such groups should be identified and stringent action should be taken against
The need of the hour is for us to unite by setting aside all differences of
opinions and divisive actions by all sections of the political dispensations and
the people at large and raise above narrow sectarian and factional feelings,
religious hate indulgence and all other intolerance, regional and language
divide. All of us have to consider the country as our nation and its interest as
paramount over all other considerations.
The old dictum that United we stand, Divided we Fall should
reverberate all through the nation to make a resolve that history will not be
allowed to be repeated and that the nation will stand united to face the
disastrous consequences of the ongoing Corona virus holocaust and the impending
economic recession on account of the global and national lock down and come out
successfully to become one of the formidable super economic power of the world.
Let a new Indian nation emerge to fulfill the aspirations and the dreams of the
130 crores Populous of India. Let us follow the clarion call of Swami
Vivekananda, Arise, Awake and Stop Not till The Goal is reached. Let us
resolve, we can, we shall and we have done it.
Written By: T. R. Radhakrishnan
E-mail [email protected]