Revadi culture of India’s upper crust

 TV studios are having heated debates over ‘Revadi culture’, a term coined by Prime Minister Narendra Modi to describe the doling out of freebies by governments to woo voters, mainly from the lower middle class and poor backgrounds, and the way it will ‘drain’ the country’s exchequer.

 However, these channels have always been very circumspect about the loans written off by banks of various wilful defaulters, who mainly come from the upper crust of society and are highly influential.

In a written reply in Rajya Sabha on August 2, Minister of Finance Bhagwat K Karad said the banks have written off loans worth about Rs 10 lakh crore in the last five financial years. He said in 2017-18, the write-off by banks was Rs 1,61,328 crore, which sharply rose to Rs 2,36,265 crore in 2018-19, followed by Rs 2,34,170 crore in 2019-20, Rs 2,02,781 cr in 2020-21, and Rs 1,57,096 crore in 2021- 22. Bank loans to the tune of Rs 9,91,640 crore have been written off from 2017-18 to 2021-22, he added.

Information collected from the RBI under its Central Repository of Information on Large Credits database, which collates credit information of all borrowers having aggregate credit exposure of Rs 5 crore and above, shows that the total number of wilful defaulters in the last four years stood at 10,306. The minister also shared details of the top 25 wilful defaulters at the end of March 2022, and absconding diamond merchant Mehul Choksi, who owns Gitanjali Gems Ltd, tops the list as he owes Rs 7,110 crore to various banks. The other top defaulters include Era Infra Engineering (Rs 5,879 crore), Concast Steel and Power Ltd (Rs 4,107 crore), REI Agro Ltd (Rs 3,984 crore), ABG Shipyard (Rs 3,708 crore), Frost International Ltd (Rs 3,108 crore), Winsome Diamonds and Jewellery (Rs 2,671 crore), Rotomac Global Private Limited (Rs 2,481 crore), Coastal Projects Ltd (Rs 2,311 crore) and Kudos Chemie (Rs 2,082 crore). Considering the clout these defaulters enjoy, they either go scot-free or are let off the hook after they pay a portion of it.

 In a related development, the Parliament Estimates Committee has put out a report early this month that talks about a big hole in the public exchequer caused by tax sops that were introduced in 2019-20 for corporates. The government had slashed corporate tax rates in September 2019 to 22 per cent from 30 per cent and for newly-incorporated manufacturing units, it was reduced to 15 per cent from 25 per cent.

The government had argued that low tax rate would attract new investments and this would revive growth. A wider tax base would, in turn, make up for the fall in corporate tax collection. However, according to a report by the parliamentary committee submitted on August 8 this year, the Government suffered a revenue loss of Rs 1.84 lakh crore in the two fiscal years due to a reduction in corporate tax rates. In 2019-20, the overall loss was Rs 86,835 crore, followed by a loss of Rs 96,400 crore in 2020-21. It is beyond debate that fiscal prudence is crucial for good governance and efficient delivery of services. But the burden of ensuring that should not rest solely with the middle class and the poor.