SOUTH-EAST ASIAN CRISIS-Bitter Medicine

1996-97 just released by the RBI, One would have thought that given Narasimham' s long experience in the RBI, he would have asked a few questions before using the above statistics. The very first doubt that arises with respect to the NPA figures in the report relates to the figure of total NPAs in 1996-97. In 1995-96, total NPAs, including those in the priority sector, were put at Rs 39,583,94 crore. How come in 1996-97 NPAs had come down to just Rs 20,284.70 crore? Was it because of some special effort that the banks mounted to recover outstanding loans or because of major write-offs? Or could it be the result of some definitional change? That a definitional change could indeed be the explanation cannot be ruled out. As far as agricultural advances go, a major definitional change has been introduced whereby agricultural NPAs could get enormously inflated. Hereafter agricultural advances outstanding for more than two quarters are to be taken as NPAs whereas earlier the qualifying period was one year. So priority sector NPAs are bound to get inflated. Likewise, if non-priority sector NPAs have been redefined to result in a lowering of the figure, the result cannot but be what Narasimham is grieving over. Could it further be that the figures have been so arranged as to support what Narasimham has made up his mind on?