The minister and the mission

The minister and the mission
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First Published: Sun, May 25 2008. 11 51 PM IST
Updated: Sun, May 25 2008. 11 51 PM IST
Your report on the state of the National Rural Health Mission, or NRHM (Mint, 16 May), should be an eye-opener. It shows how gross indifference, apathy and inaction can virtually kill a laudable scheme meant for the most deprived rural sections of society. In the past four years, health minister Anbumani Ramadoss has been rather obsessed with the director of the All India Institute of Medical Sciences and smoking and drinking scenes on television and theatre screens. One wishes and prays that he can now spare some time and effort to ensure that NRHM reaches the needy millions across India. Thereby, he will have the blessings of the masses that he might need in the next general election. Is the minister listening?
— S.C. Grover
The issue of the State Bank of India’s (SBI) withdrawal from equipment and tractor finance appears to have been a bit stretched. But, it is also a case of not letting public sector banks make appropriate business decisions.
On the one hand, the government wants these banks to be more profitable than their private sector counterparts and be prepared to face strong foreign banks post-2009. On the other hand, politicians and the government are not letting these banks take decisions that would improve their performance.
If banks are burdened with non-performing assets in one sector and are not able to recover from that segment, this burden will shift to other sectors, creating problems on advances and low rates on deposits. Besides, equipment and tractor loans are not availed by small and marginal farmers. Rather, they go to well-off farmers.
The tractor lobby, the big farmers lobby and politicians are spreading the burden of high cost of loans to all sectors in the economy. It’s crop loans that are taken by poor farmers, not equipment or tractor loans.
If the net interest margin of banks is reduced, then banks will be forced to take to the risky business of derivatives on a large scale. In view of little capitalization and weak inherent strength of Indian banks, jumping into such a business will be risky. What happened to Bear Stearns, which was in the same business with a high leverage of more than 30 times its capital, was that it was forced to auction itself in the market. Post-2009, if this apathetic attitude of the government towards public sector banks continues, then it may cause serious problems in the sector.
- Ravi Kant
It’s true that jet fuel prices are going up and up with no restraint in sight (“Budget airlines losing steam”, Mint, 22 May). As currency appreciation hurt the garment export industry badly in the last few quarters, the aviation industry can learn a few lessons from it: Hedge oil prices to more balanced levels for forthcoming quarters—the way Southwest Airlines in the US has been doing since 2002. This could provide better elbow room to shed operating costs.
Secondly, as the traffic to tier II cities and major tourist destinations across the country is soaring, airlines may develop a route-sharing agreement by partnering with rivals. This way, they can streamline operations by avoiding flights on unviable air routes and save themselves from competition.
After investing billions of dollars in new aircraft and incurring huge costs to establish a network across the country, there’s no looking back for budget airlines. They simply cannot let this investment sink for nothing.
As more airports come up and incomes of middle- class travellers go up, the future will be better, if not brighter. It’s a rough patch for these small airlines; they have to minimize losses and do some intelligent, strategic thinking.
- Sameer Gupta
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First Published: Sun, May 25 2008. 11 51 PM IST