DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Cry the beloved country-may, 2012.

**Peptobismol** · 05-31-2012, 09:22 PM

My comments have nothing to do with the isms or my political ideology/leanings. There are two entrepreneurs. One is prudent and is successful in his business and is making profits. The other over-stretches his resources,mismanages his business, fails to understand the course of the market, takes bad decisions, incurs losses and looks up to Government for help. Both are in the same business but their achievements differ. My question is why should the Government ignore the former while helping the later. The later may deserve a helping hand to save the many families of workers from starvation. But who is responsible for all the woes. Why shouldthe punishment for the mistakes committed be transferred to the Government? If the sick unit has to be helped out do it but give some tax relief to the good perfomer also so that efficiency is also rewarded.

Now what are the effects of the action taken by Government? Let us look at that briefly:

1. With the concurrence of RBI the Banks will do a cosmetic surgery to recast their balance sheets by taking away Rs. 35000 crores worth of assets from the NPA (Non Performing Assets) basket and will add them to the Performing assets basket. The banks will look healthy to that extent because one vital parameter determining the health of the banks will look strong viz. the percentage of NPA to total assets in the Balance Sheet. But another parameter called the return on assets will go down to very low levels because these “performing Assets” do not earn any interest because of the moratorium declared. Moratorium is a decent word and in course of time the accumulated interest under moratorium will also be converted into a term loan with a long repayment period at raidiculously low rate of interest or at nil interest. In simple words that can be understood by the common man this effectively means that the inefficiency of the individual sick units and their owners have been effectively transferred to the financing banks. The politicians claim to have saved the labourers from starvation death,Government gets the votes, the inefficient entrepreneurs get a reward, the efficient entrepreneur turns philosophic,the banks keep licking their wounds (they have several of them) while the common man stands bewildered as the events march past him.

More about this jugglery later.

Cheers.

05-31-2012, 09:22 PM	#7
Peptobismol Join Date Oct 2005 Age 58 Posts 4,386 Senior Member	My comments have nothing to do with the isms or my political ideology/leanings. There are two entrepreneurs. One is prudent and is successful in his business and is making profits. The other over-stretches his resources,mismanages his business, fails to understand the course of the market, takes bad decisions, incurs losses and looks up to Government for help. Both are in the same business but their achievements differ. My question is why should the Government ignore the former while helping the later. The later may deserve a helping hand to save the many families of workers from starvation. But who is responsible for all the woes. Why shouldthe punishment for the mistakes committed be transferred to the Government? If the sick unit has to be helped out do it but give some tax relief to the good perfomer also so that efficiency is also rewarded. Now what are the effects of the action taken by Government? Let us look at that briefly: 1. With the concurrence of RBI the Banks will do a cosmetic surgery to recast their balance sheets by taking away Rs. 35000 crores worth of assets from the NPA (Non Performing Assets) basket and will add them to the Performing assets basket. The banks will look healthy to that extent because one vital parameter determining the health of the banks will look strong viz. the percentage of NPA to total assets in the Balance Sheet. But another parameter called the return on assets will go down to very low levels because these “performing Assets” do not earn any interest because of the moratorium declared. Moratorium is a decent word and in course of time the accumulated interest under moratorium will also be converted into a term loan with a long repayment period at raidiculously low rate of interest or at nil interest. In simple words that can be understood by the common man this effectively means that the inefficiency of the individual sick units and their owners have been effectively transferred to the financing banks. The politicians claim to have saved the labourers from starvation death,Government gets the votes, the inefficient entrepreneurs get a reward, the efficient entrepreneur turns philosophic,the banks keep licking their wounds (they have several of them) while the common man stands bewildered as the events march past him. More about this jugglery later. Cheers.
	Quote