Attributing high bad loans mainly to steel, road and power sectors, Finance Minister Arun Jaitley on Wednesday said the government has initiated several steps to deal with the NPA problem and more are on the anvil to protect the domestic steel industry. "Highest NPAs are in steel sector... Second is national highways... Imported steel is cheaper than domestically manufactured steel. Wherever, steel dumping is happening, we have imposed anti-dumping (duty). "In some cases, import duty has been increased.
There are other such proposals before the government and efforts will be made to encourage domestic industry," he said while replying to a discussion on Supplementary Demands for Grant. The government, he said, will "endeavour to promote sale of domestic steel so that NPA in the sector is reduced. If the economic activity will increase, the consumption of steel will also go up and its price will become competitive." Further, he said almost 75 National Highways are at a standstill because uncompetitive rates - the second area where Non Performing Assets (NPAs) have been created.
"The third area where NPA has been created is power sector. It was very typical case under the UPA government of crony capitalism. Everybody decided to loot the coal mines.
You created surplus capacity and industrial growth was slow," he said. A situation has been reached where surplus power is there in India and power companies which have taken contracts are unable to sell power, he said. The fourth contributor to NPAs, he said, is distribution companies of the state governments.
"If you are going to loose Rs 1 or 2 per unit, how are you going to finance it. Tax all the people and finance it or you take loan from bank and finance it. Now if state government has decided not to charge even cost of power, some state governments' distribution companies are in bad shape," he said.
Banks will no longer be in position to lend to businesses and therefore economy itself will suffer, he said, adding that these are the prime areas where NPAs are created and therefore some factors are external which we are trying to resolve, like Highways have entirely internal issues, but steel has suffered due external reasons. "Slowly we will be in position to resolve most of the problems. We inherited economy where banks' NPAs were 6 percent.
There were stressed assets of another 6 percent. And in those stressed assets there may be some hidden NPAs," he said.
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