and also exemption to investment division of foreign banks located in IFSC . Tax incentives to attract Foreign Investments :
The last Budget granted 100 % tax exemption to attract Foreign Investment into Infrastructure sector , of course on certain conditions . As they cause small inconvenience , these conditions were also relaxed in the present Budget , especially related to conditions that prohibit private funding and restrict commercial activities .
Further , tax holidays are extended till 31 st March 2022 for affordable Housing Projects .
Further , the present Budget initiated ‘ Customs Duty Rationalisation ’ to eliminate 80 ‘ outdated ’ exemptions and to review more than 400 exemptions to ensure “ Distortion free Customs duty Structure ”, as per the guidelines of World Trade Organisation for the benefit of global monopoly Capital . Budget proposals for financial sector for the benefit of foreign & domestic global corporate forces
The Budget 2021-22 proposed to amend Insurance Act , 1938 , to raise permissible Foreign Direct Investment [ FDI ] limit from 49 % to 74 % in Insurance Companies to allow foreign ownership and control . Thus , our country will have ‘ Atma Nirbhar ’ Foreign owned Insurance companies shortly .
The Budget also proposes for the legislative amendment in the same session to privatise two public sector banks in addition to Industrial Development Bank of India [ IDBI ] and also one General Insurance Company in 2021-22 . Budget proposal to setup private sector led Bad Bank to deal with NPAs
This is in fact a government plan since long time in view of the growing problem of Nonperforming Assets / Bad loans . As per RBI
March , April - 2021 report , NPAs will be increased to 13.5 % of total advances . This will lead to lending crisis . In order to raise the lending capacity of Public Sector Banks , the present Budget plans to pump Rs . 200 billion into these banks from April 2021 . What is a bad bank then ?
It is a new structure consisting of Asset Reconstruction Company and Asset Management Company , led by private sector to consolidate and take over existing stressed debt and then manage to dispose of the assets to alternate investment funds and other potential investors at reduced rates for eventual value realization . Why does the problem of NPAs / Bad debts growing steeply especially since 2014 ? Who are these defaulters ? Who is supporting this growing trend ? What is this scam / fraud ? What is its consequence finally ?
The issue of NPAs / Bad debts is growing sharply since 2014 . During 2004-19 , the scheduled commercial banks wrote off Rs . 8.41 lakh crore worth bad loans from their books / balance sheets . As high as 75 % of these write offs worth Rs . 6.35 lakh crore belongs to the bad debts of the period 2014-19 .
This process appears to be technical , just to clean the Bank ’ s books for tax efficiency . However , the recovered amount , if any will be shown as profits later . Shockingly , RBI itself states that 90 % of written off amount was never recovered so far . K . S Chakraborty , Former Deputy Governor of RBI worriedly states that these write-offs itself is a “ big scam ” because most of the written off loans are big loans issued to powerful Corporates . Moreover , bad debt is identified as the primary cause of Banking crisis especially from 2014 onwards .
Thus , it is simply the government supported Banking Scam and clearly shows that the powerful corporates are responsible for the lending crisis of the Public Sector Banks . Despite this clear evidence , the dominant forces and ruling class strongly popularize the argument that the ‘ Farm loan Waiver ’ is the cause of Public Sector Banks ’ crisis so as to mould the public opinion accordingly . This allegation is totally wrong . The RBI data shows that in 2017-18 , Farm loan waiver in seven States is just equal to Rs . 49,800 crore while the bad loans written off of the top corporate forces during the same year is as high as Rs . 1,61,327 crore . Similarly , SBI study states that in FY 2019 , Farm loan NPAs increased to 12.4 % of total bad loans of Rs . 8 , 79,000 crore . This indicates the percentage share of Farm loan NPAs in the total bad debts .
Moreover , to mitigate the problem of Farmers distress due to drought or monsoon failure , the government steps forward and declares ‘ Farm loan waiver ’. This amount is part of the Central Budget Expenditure . How then will it lead to Banking Crisis ? Further , Farm loan waivers are spread over a period of 2-5 years for a variety of reasons . Moreover , only 10 States have announced this scheme for the last 6 years and Jharkhand became the 11 th one only in 2020-2021 . In all these States , wide variations will be noticed between announcement and actual outlay which is always less than 50 percent . Usually , Farm loan waiver will be only on the paper and is not applicable to Tenant Farmers whose proportion is high among the total peasants . Thus , the real offenders , the top level borrowers / top corporate forces are protected by the government itself by allowing write off of their loans to throw the public sector banks into the trap of lending crisis . On this pretext , PSB ’ s will be privatised to establish the domination of corporate forces in the Financial Sector .
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