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 economy.
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 financial commitments.
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.
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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 rehabilitations, 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.
7. 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.
8. 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.
9. What are required for the present?
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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 different regions. 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, destructions 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 1947. 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 them.
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 intolerances, 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 Populus 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.
(The author can be contacted through his e-mail email@example.com)