With reference to the article ‘We are in an era of financial repression’ (December 23), to revive our languishing economy we need to activate financial mediation. That would hinge on PSBs that account for around 75 per cent of loans disbursed in the banking system — and they own 80 per cent of NPAs.
The RBI has been for long addressing concerns over inflation, liquidity flooding and exchange value correction being but an adjunct. Rate cuts cannot help an economy that is hit by lack of demand.
We see massive injections of liquidity by major nations failing to jump-start economies. Worse, these monetary interventions have largely triggered unsteady flow of funds between economies.
The financial repression practised by RBI and the government should not be seen in isolation. The government has to provide huge funds for defence expenditure in view of prevailing tension in the border and healthcare especially for Covid control and vaccination which are going to cost heavily. Due to the current uncertainty prevailing due to the pandemic, the private sector is going slow on investments. Fund availability and low interest alone will not induce borrowings and large corporates other avenues to raise funds. On the other hand, many MSMEs are starved of working capital and lending should follow bottom up approach starting from these borrowers so that economic stimulus is both broad based and deep rooted. The co-origination model of banks and NBFCs jointly funding the MSMEs should be tried seriously and the regulator may also consider relaxing NPA norms for them to 120 days for sometime.
With reference ‘We are in an era of financial repression’ (December 23), while the unlocking of the lockdown and speedy enforcement of stimulus measures are yielding positive results, an intervention by the government to further strengthen cash flows in the economy is vital to push consumption and demand. The lowered rate of interest and abundant injection of liquidity needs to be optimally utilised to spur investment. As public sector banks occupy a major portion of the banking space it is essential to infuse more capital into them, besides supporting the banks with adequate infrastructure to ensure seamless flow of credit.
Inflation cause mainly by the rise in the price of consumer items must not be considered as a limitation in enhancing the government borrowing and spending for revenue and capital expenditures. An expanding fiscal deficit is inevitable at this juncture as the economy is embarked for revival from the pandemic induced economic wreckage.
With reference to the report ‘Air pollution has killed 16.7 lakh Indians since 1990: Study’ (December 23), more than strict rules, educating people on hazards of air pollution will work wonders. Without people’s co-operation and awareness, problems relating to air pollution cannot be solved. With superior and good public transport system people will definitely not take out their private vehicles on road which will not only reduce the road traffic but will also reduce pollution levels and save fuel.
Besides, government servants, should be allowed to use their vehicles only for emergencies and should be asked to use the public transport.
The odd even number scheme is also a good move on the part of the Delhi government and should be introduced on an experimental basis.
With reference to a news item carried in BusinessLine dated December 22, 2020, that said the number of passengers who arrived in Mumbai from the UK with suspected infection of mutant coronavirus has risen to 15, the Press Information Bureau has clarified that establishment of the genome sequence to identify the presence of the mutant virus is yet to be done by a designated lab of ICMR, DBT, CSIR and NCDC.
We apologise for the error.
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