Non Performing Assets (NPAs) & how it affect Banks - concept, issues & challenges

You might have come across cases where an individual or a company takes a Bank Loan and doesn’t pay back for various reasons. While he/company becomes a defaulter, Banks also tend to have their equivalent amount locked up. It makes effort for recovery and depending upon the case, a part of, entire amount or nil recovery is made. These are broadly classified as what’s called in Bank’s parlance a “Non-Performing asset (NPA)”.

Let’s examine NPA in Indian context, what it means, various degrees, its magnitude and implications.

Non-Performing Assets:

An asset, including a leased asset, becomes non performing when it ceases to generate income for the bank. A Non-Performing Asset (NPA) is a loan or an advance where:

i.      interest and/ or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,

ii.       the account remains ‘out of order’ in respect of an Overdraft/Cash Credit (OD/CC),

iii.     the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,

iv.     the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops,

v.      the instalment of principal or interest thereon remains overdue for one crop season for long duration crops,

vi.     the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of guidelines on securitisation dated February 1, 2006.

vii.   in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.

viii.  in case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter.

Categories of NPAs:

Banks are required to classify nonperforming assets further into the following three categories based on the period for which the asset has remained nonperforming and the realisability of the dues:

i. Sub-standard Assets
ii. Doubtful Assets
iii. Loss Assets

Sub-standard Assets -  A substandard asset is one, which has remained NPA for a period less than or equal to 12 months. Such an asset will have well defined credit weaknesses that jeopardise the liquidation of the debt and are characterised by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected.

Doubtful Assets - An asset is classified as doubtful if it has remained in the substandard category for a period of 12 months. A loan classified as doubtful has all the weaknesses inherent in assets that were classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, – on the basis of currently known facts, conditions and values – highly questionable and improbable.

Loss Assets - A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly. In other words, such an asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. 

 

How a provisioning is done by Banks:

 

 

Status of NPAs

 

As per the data made available by the Reserve Bank of India (RBI),  Gross NPAs of the Scheduled Commercial Banks SCBs), especially Public Sector Banks (PSBs) have shown an increase during the recent years i.e.

Rs. 71,080 crore (March, 2011, GNPA ratio 2.32%), 

Rs.112,489 crore (March, 2012, GNPA ratio 3.17%), 

Rs. 1,55,890 crore (March, 2013, GNPA ratio 3.84%) and 

Rs. 1,76,009 crore (June, 2013, GNPA ratio 4.39%, provisional).

 

Although GNPAs have increased at system level, the GNPAs ratios of banks do not indicate systemic vulnerability. Main reasons for increase in NPAs of banks, inter-alia, are (I) switch over to System Based Identification of NPAs as against the manual compilation earlier where individual officers tended to suppress the extent, (ii) current macro-economic situation in the country, (iii) increased interest rates in the recent past, (iv) lower economic growth in 2011-12 (6.2 per cent) and   2012-13 (5.0 per cent) and (v) aggressive lending by banks in the past, especially during good times.       

 

 

The level of NPAs vary for different sectors:   (in % of gross advances)

 

 

The NPAs as percent of gross advances has come down over the years even though in absolute terms it has gone up. The first graph shows NPAs as percent of gross advances for Public Sector Banks while the second graph shows the actual NPAs (in Rs crores)

 

 

 

 

BANK GROUP-WISE DETAIL OF TOP 30 DEFAULTERS OF RS. 1 CR. AND ABOVE :

 

If one looks at the proportion of top 30 NPA accounts for each Bank, it amounts to 40% of the total NPAs. What it means is that its not the smaller, poor people or companies who are responsible but its these large corporates who are primarily responsible for NPAs that we have today

 

 

LEGAL MECHANISMS FOR RECOVERY OF DUES BY BANKS:

The present set-up provides an effective and expeditious mechanism to the banks and financial institutions to recover their dues.  A brief synopsis of the existing mechanism in this regard is given below:-

(i)     The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 – The Act empowers Banks / Financial Institutions to recover their non-performing assets without the intervention of the Court, through acquiring and disposing of the secured assets in NPA accounts with outstanding amount of Rs. 1.00 lakh and above.   

(ii) Recovery of Debts Due to Banks and Financial Institutions (DRT) Act: The Act provides setting up of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) for expeditious and exclusive disposal of suits filed by banks / FIs for recovery of their dues in NPA accounts with outstanding amount of Rs. 10 lac and above.  Government has, so far, set up 33 DRTs and 5 DRATs all over the country.   

(iii) Lok Adalats:  Section 89 of the Civil Procedure Code provides resolution of disputes through ADR methods such as Arbitration, Conciliation, Lok Adalats and Mediation. Lok Adalat mechanism offers expeditious, in-expensive and mutually acceptable way of settlement of disputes.   Government has advised the public sector banks to utilize this mechanism to its fullest potential for recovery in Non-performing Assets (NPAs) cases.   

Among the various channels of recovery available to banks for dealing with bad loans, the SARFAESI Act and the Debt Recovery Tribunals (DRTs) have been the most effective in terms of amount recovered.

 Steps for recovery of NPAs

 

To improve the health of the financial sector, to reduce the NPAs, to improve asset quality of banks, and to prevent slippages, Reserve Bank of India (RBI) has issued instructions which stipulate that each bank-

Ø  To have a Board approved loan recovery policy.

Ø  To put in place an effective mechanism for information sharing for sanction of fresh loans/ad-hoc loans/renewal of loans to new or existing borrowers.

Ø  is required to have a robust mechanism for early detection of signs of distress including prompt restructuring in the case of all viable accounts;

Ø  to have a loan recovery policy which sets down the manner of recovery of dues, targeted level of reduction (period-wise), norms for permitted sacrifice/waiver, factors to be taken into account before considering waivers, decision levels, and reporting to higher authorities;

Ø  monitoring of write-off/waiver cases;

Ø  valuation of properties including collaterals accepted for their exposures;

Ø  taking recourse to legal mechanisms like SARFAESI Act, 2002, DRTs and Lok Adalats.

Ø  To review NPA accounts of Rs. 1 crore and above by Board of Directors and top 300 NPA accounts by Management Committee of the Board.

While Banks do provide for "write-offs" in their annual accounts to take into account for losses on account of not realizable NPAs, it has to be remembered that it comes at the cost of capitalization by an equivalent amount and thus affect the performance and financial health of the Bank directly in the long run. The answer lies in prudent lending, being in constant touch with the creditors, close monitoring and follow up on the timely action.

 

 

 

Tax avoidance by multinational companies - a fit case for joint action by all countries

Do you recall the Vodafone tax issue and how it was taken up by the Corporates to bash up Indian Government as anti FIIs ? Is it a genuine case of tax payable elsewhere other than India (as contended by Vodafone) or a very deliberate case in tax avoidance ?  Is it something peculiar to India because we have certain lacunas in our tax laws/implementation or interpretations which can be exploited legally or is it becoming a more universal phenomenon where other countries (which incidentally were seen supporting the cause of Vodafone when it suited them – a typical case of poetic justice) too are getting affected with huge loss of taxes and revenues? Let’s examine …..

Vodafone has been involved in a Rs 11,200 crore tax dispute in India for the purchase of Hutchison's stake in Hutchison Essar in 2007. While the telecom company contested the jurisdiction of Indian tax authorities over the deal, the income tax department slapped a tax demand notice on the company. In January 2012 Vodafone won the legal battle against the government with the Supreme Court ruling that the government had no jurisdiction to tax such deals. To counter the judgment, the government amended the Income Tax Act retrospectively to bring Vodafone-like cases under its ambit under “General Anti Avoidance Rules (GAAR)”. It has created lot of uproar and noise esp in the international market giving perhaps a false impression as if Indian tax laws are against the multinational corporations. Following up on the grievances, the introduction of GAAR has been deferred by two years (to April 1, 2015) and investment made before Aug 2010 will be grandfathered.

British telecom major Vodafone is not in favour of holding conciliation talks with India over its  withholding tax dispute under Indian jurisdiction, but instead has proposed they be held under a neutral authority. If the talks are held under Indian jurisdiction, the company fears if the talks fail, it might once again be dragged into litigation under the Indian legal system.

And Vodafone is not the only such case in India. A spate of international arbitration notices served by foreign companies has prompted the government to draft a new model treaty that will make it harder for foreign investors to approach international courts. The reworked treaty will stipulate that the foreign investor will not be able to challenge the legality of an unfavourable verdict from the  Supreme Court. Further, the investor would have to exhaust remedies under local laws before seeking international arbitration under bilateral investment protection agreements (BIPA). The Vienna Convention provides for such declaration of intent.

As many as 17 companies or individuals, including Germany's Deutsche Telekom, Vodafone International Hol-dings BV,  Sistema, Children's Investment Fund and TCI Cyprus Holdings, have served notice on India under BIPA, challenging various court rulings and policy measures. Apart from Vodafone’s insistence on international arbitration in its seven-year-old multi-billion-dollar tax dispute with India, White Industries Australia had won a favourable award against India.

 While I am no expert on taxation or on tax avoidance, what I gather is that shell companies are formed outside India to avoid paying tax here. But is this a problem confined only to India? An impression is being created, especially outside India as if Indian tax laws are over restrictive and exploitative and somehow restricting the entry of foreign investment in India. But is it the case? It is now a well-accepted fact that the multinational companies have developed an unprecedented know-how for minimising their worldwide tax pressure.

It is now a well-accepted fact that the multinational companies have developed an unprecedented know-how for minimizing their worldwide tax pressure. Let’s examine some of the recent major cases…

During my recent visit to UK in May 2013, I had retired rather early one evening hoping for a good rest after a long day.  It was then I switched on TV and happened to watch the hearing of Google over the alleged issue of tax avoidance by Google in UK on BBC by Commons Public Accounts Committee headed by Margaret Hodge. It turned out to be one of the most interesting debates I have seen in long time – the precise use of words, the scathing attack on Google by members of the committee and their knowledge levels – it was very informative and had me thinking about the larger issue of tax avoidance of global operators. Margaret Hodge, said Google ‘do evil’ is ‘unethical, devious and unethical’ and use ‘smoke & mirrors to avoid paying tax’. Mr Brittan said that there was no cover up at Google and nothing has been illegally hidden.

What is ‘tax avoidance’? 

Simply put, a company based on its business turnover makes profit and should pay profit tax to the concerned authorities in the territory it’s operating. When a company operates in more than one territory, it should pay profit tax to the respective authorities based on the respective profit in these territories. Companies, it is increasingly observed, try to offset their profits in territories where they have to pay taxes by coloring them with certain internal cost and try and shift all the profit to a tax haven territory such as Mauritius, Bermuda or Cayman Island. There is nothing illegal since these companies do so by exploiting the loopholes in the existing tax systems in various countries which are complex and without overall cohesion. And thus, these are cases of tax evasion.

The expose of Google’s tax affairs, coming after revelations that Amazon had paid a fraction of its profits in corporation tax, have increased the perception in UK that the HMRC is ‘operating by 20^th century tax rules that need to be urgently updated’. Even though the tax affairs of companies such as Apple, Microsoft & Starbucks are scrutinized by UK tax authorities, the UK PM has recently written to the President of European Council Mr Rompuy that the “loss of revenue resulting from tax evasion and aggressive tax avoidance is staggering”. The recent decision of Starbuck to pay an additional $30 million to UK authorities had raised hope for similar action by other companies but that doesn’t seem to be forthcoming.

Interestingly, Google is not the only major company to have caught the attention of other Governments. Tax structures used by Amazon to route billions of pounds from sales to British customers through Luxembourg, paying negligible UK tax, are among a series of international loopholes earmarked for closure in a programme of reforms backed by G20 nations. The "once-in-a-century" move in the shape of a  15-point action plan, which has been produced by the Organisation for Economic Co-operation and Development (OECD) club, was a "major breakthrough" and was "at the heart of the social contract".

Osborne, the UK chancellor recently said that "People and companies have to pay the taxes that are due, it's the only way to operate in a fair and competitive society … Our message is clear: everyone must pay their fair share of tax." In recent times, the French tax authorities have aggressively challenged the tax claims of digital businesses such as Google, Microsoft and LinkedIn, raiding their Paris offices. 

The non-international companies in the UK and elsewhere have become increasingly vocal in their attacks on the unfair tax advantages afforded to multinationals such as Amazon. Some of Britain's largest high-street chains – including Sainsbury's, John Lewis, Dixons and Mothercare – have all called for a crackdown on Amazon's tax arrangements.

These revelations of multinational companies doing huge business in a country and virtually not paying any corporation tax has provoked some concern in the respective governments that something needs to be done. In this era of liberalized cross border trade and free capital flows, MNCs find themselves in considerable freedom to choose where they pay tax on profits. There are corporations such as Google whose commercial value is derived from a piece of intellectual property such as a search engine algorithm or a drug patent and they are thus able to register their profits in tax havens.

This is how it works – A MNC registers its intellectual property in a subsidiary company based in a tax haven like Bermuda or Mauritius. This subsidiary then charges another subsidiary operating in a big country like UK or India a massive fee for the right to use their intellectual property. Any trading surplus in these countries is thus offset by the cost of the fee while profits keep accumulating in tax haven the group company. National Governments are trying to stop this egregious ‘profit shifting’ on their own but is proving to be a herculean task in the light of very complex global tax loopholes.

So, what’s the way out?

A natural solution is to have an international agreement by all countries to tax the profits of multinational firms collectively and divide the revenues based on the amount of business done by these companies in various territories. American states have long operated a system known as “apportionment”. It may sound difficult but in the long run and in the wake of very widespread tax avoidance by MNCs, this sort of arrangement is perhaps the only viable solution.

Economists never agree! - Dreze & Sen vs Bhawati & Panagariya's take on RSBY

Economists disagreeing with each other and arguing on same issues, often with extremely diametrical viewpoints couldn’t have been better than the recent debate between Jagdish Bhagwati (and Arvind Panagariya) and Amartya Sen (and Jean Dreze) and how it has turned a bit (totally an understatement) political as a proxy war between the economic model based on growth of Narendra Modi ( supposedly promoted by Bhagwati & Panagariya – their being original Gujarati is purely coincidental) and an all inclusive and more equitable growth model of Bihar (as promoted by Amratya Sen or rather his criticism of Modi’s model though for reasons other than economics). Newspapers (Shekhar Gupta) and electronic media couldn’t have got a juicier debate than this and they relished it till the last point. It was at times interesting how serious economists as these could actually talk like common people having common humane emotions such as anger, jealousy and rivalry!

The origins of this debate are the books they brought out recently. While Bhagwati and Panagariya brought out “why growth matters”, Jean Dreze and Amartya Sen came out with “An uncertain glory- India and its contradictions”. Both the books, while arguing which model works better for India, discuss the status, failures, issues and likely way out in specific sectors such as education, health care, poverty and inequality.

I would like to discuss below how they have interpreted Rastriya Swasthya Bima Yojana (RSBY) and how the same scheme is made to look very different depending upon which of these two books we read. I have decided not to express my views or take on their logic and attempt here is to simply represent their view point since some of us would not have found time to read their take on RSBY. We can have a debate following from this.

There’s an old saying that economists never agree. However, Bhagwati & Pangariya point out that the late Joan Robinson, a Cambridge economist and Gus Ranis, the Yale economist, were overheard  astonishingly agreeing on how remarkable Korean development was! It turned out that she had North Korea in mind and he was referring to South Korea!

RSBY- as viewed by Dreze & Sen – public provision of health services vs private health insurance

In chapter 6 titled “India’s Health Care Crises”, Dreze & Sen start by criticizing media pointing out that the coverage on essential aspects of health and health care in the mainstream media, including both – the relatively lightweight newspapers as well as most seriously engaged parts of the media, is extremely limited. They point out that except for BCG vaccine, India’s immunization rates are uniformly lower that the corresponding averages for Sub-Saharan Africa or for the least developed countries and India’s terrible record in child immunization has virtually remained unchallenged and unaddressed.

They point out that the public expenditure on health in India has hovered around 1% of the GDP for most of the last two decades & that very few countries spend less than that on health care. Only 9 countries in the world have a lower ratio of public expenditure on health to GDP. India’s 1.2% today compares with 2.7.5 of China, 3.8% in Latin America and a world average of 6.5%. Further, public expenditure on health accounts for less than one third of total health expenditure. The world average is 63%, Sub-Saharan average is 45%, Least Developed Countries (LDCs) is 46% as against India’s 29%. They conclude that India has one of the most commercialized health care systems in the world. Its perhaps by default since the country’s public health care facilities are very limited and quite often in a ‘run down’ condition and in very poorly managed. While the public facilities in general are highly inefficient and disorganized, private services are virtually unregulated, leaving patients at the mercy of unscrupulous practitioners and are often victims of fraud, over-medication, exploitative pricing and unnecessary surgery. To illustrate, a recent study in Chennai points out to 47% Caesarean in private sphere as against WHO norm of 15 % (its 20% in Public sector).

The opportunity to launch major initiative in health policy, associated with rapid growth in the GDP and public revenue during the last 2 decades, has been largely missed and that 1990s were largely a ‘lost decade’ for India so far as health is concerned and much of 2000s did little better. The National Rural Health Mission (NRHM) launched in 2005-06 has an expenditure of less than Rs 10000 crores during the first five years (less than 0.2% of the GDP) and far too little to make a major difference. NRHM, according to them, is a good program but can only achieve its intended objectives if there are enough resources and political commitment.

Along these faltering moves towards consolidation,  there are developments of a very different kind- towards even greater reliance on private provision of health care and private insurance of health risks.  The authors have then described RSBY (calling it Rashtriya Swasthya Bhima Yojana (page 152)) and its features. The move towards private provision of health services, they say, not surprisingly has been welcomed by the corporate sector. They have mentioned about a Wall Street Journal article praising the “business model” that RSBY represents. RSBY is a convenient springboard for the private health insurance industry – one of the fastest growing sectors of the Indian Economy.

The authors argue that the subsidized health insurance under RSBY may bring some relief to selected households and is certainly an improvement over the current ‘out of pocket system’ (OOPS). But what sort of health systems is it supposed to lead to or be a part of?  Despite the ostensible attractiveness of the logic of private insurance expected to become the backbone of India’s future health system where the Government will pay the insurance premium for BPL families while others will pay on their own, there are very serious following reasons to be concerned about this health care model:

 “Efficiency issues” – market failures associated with adverse selection and moral hazard leaving the pool to ‘high risk client’ & thereby driving up premiums and alternatively, the ‘screening’ if adopted by insurance companies will go against the basic principles of equity in health care. Further the companies may indulge in ‘cream-skimming’ ie focusing on patients who can be treated at low cost and turn away the rest. While some of these issues can be tackled with strict and sophisticated regulations, it could be hard to implement and costly as things stand.

“Distortion issues” – A health system based on commercial health insurance is likely to be biased against the preventive health care and more generally against non-hospitalized care. Reliance on scheme like RSBY will undermine public health service and preventive health care esp in India where a large part of the burden of ill health consists of communicable diseases or such diseases like diabetes, circulatory problems & cancer which can best be dealt with by early & pre hospitalization treatment.

“Targeting issues” – the idea of government paying premium for certain target groups (such as BPL) raises all issues associated with BPL targeting since there is now a premium attached with being identified as BPL. Moreover, there are studies which point out increase in post treatment expenses under RSBY.

“Equity issues” – any targeted insurance fails to meet basic norms of equity in health care – ‘exclusion errors’( in targeting),  screening of potential clients by insurance companies, the obstacles (powerlessness, low education, social discrimination) and the persistence of large unsubsidized component in the health system.

“Irreversibility issues”- the private health insurance industry can easily become a powerful lobby making it difficult to move away from that model if it proves ineffective. The current drift in India towards private health insurance, without developing a solid based of public health care has that problematic feature.

The private health insurance model is essentially the American model, the lack of reach of which President Obama has tried hard to remedy. The US health system is one of the most costly and ineffective apart from being highly inequitable and India is likely to face same issues and confront same challenges and failures with deep rooted resistance to ‘socialized health care’ in US.

The authors, while discussing on RSBY, state that health policy today is in a somewhat confused state with some positives (NRHM  and more recently a move towards public provision of generic drugs) but also a steady drift towards greater reliance on private insurance (actively encouraged by the health industry) and very little clarity about the principles on which India’s future health system should be based.

The authors argue that it is important to appreciate the importance of the commitment to universal coverage for all in a comprehensive vision of health care for the country as a whole. Thailand, Brazil, Mexico and China are good examples in this direction. This commitment to universal health care would require a major transformation in two respects. The first is to stop believing that India’s transition from poor health to good health could be easily achieved through private health care and insurance. The overarching objective of ensuring access to health services to all member of the community irrespective of their ability to pay is intrinsically a public responsibility and can’t be achieved by private providers. The second aspect is the need to go ‘back to basics’ as far as provision of public health services – both preventive and curative kind- is concerned with a renewed focus on primary health care.

They conclude by observing that while RSBY is a humane programme and much better than leaving the poor to die or suffer from neglected health care, better results can be achieved at far less cost through early and regular health care for all.

RSBY – Bhagwati & Panagariya (chapter 16 "Reforming Health Care")

The principal plausible justification for government intervention in providing routine outpatient care stems from poverty. A large chunk of the population at the bottom of the income distribution is too poor to afford even a minimum socially acceptable level of health care. To that extent, a modern welfare state must strive to provide a minimum level of health care. The authors argue that even though India had begun to build up the primary health care infrastructure from 1960s following the recommendations of the Health Survey and Planning Committee (Mudaliar Committee), these fifty years of efforts in building the health infrastructure have not led to the provision of effective health care in rural India. Even today, no more than one-fifth of the rural patients seek routine outpatient care at the public health facilities while the remaining still depend on largely unqualified providers.  Given the government’s inability to deliver the service after a half century of efforts, alternative models must be given a chance. In their view, the best course is to place the financial power to but health services in the hands of the patients; give cash transfers to the poor to meet their routine health care expenses. The government can continue to provide services but it must compete against the private providers and meet all the costs from the revenues they earn by charging the patients.

Major illness which include child birth and maternity care as well as prolonged illness because of their high cost makes a perfect candidate for insurance. Group insurance will take care against the adverse selection and since the poor can’t afford the insurance premiums, the government will have to foot the bill.

In their view, schemes such as RSBY are on the right track. They target the poor, cover major illness, carry significant but fiscally manageable coverage and allow private and public providers to compete for patients. They also seem scalable. The operation of several schemes (Rajiv Arogyashree in AP, Yeshasvini in Karnataka and RSBY) allows for experimentation according to local needs as well.

They have further made assumption that 5% of 600 million individuals (requiring health insurance at government’s expense) ie 30 million requiring hospitalization every year and with an average hospitalization cost of Rs 10000, it comes to Rs 300 billion which as a percentage of GDP of Rs 78,779.47 billion comes to about 0.38% of GDP. (which they feel is achievable). They have criticized the “right-to-health” bandwagon’s recommendation of (High Level Expert Group appointed by the Planning Commission and recommended by National Advisory Council (NAC)) of a national health package accessible to all Indians free of charge by 2022 on the grounds of government’s ability to provide universal coverage. They also advice a cautious view of universal health coverage as a legal right. It is a distant goal as of now and such a recognition at this stage can be costly and counterproductive.

Conclusion-  I have great respect for all four economists. Having read both these books, I however, feel that they have started from a pre-conceived view point and have tried to justify their thinking and reinforce their model. The empirical evidence at times is either missing or weak. While the need to have greater percentage of GDP towards provision of public health care and need to put in more resources in NRHM in undeniable and should be done without any further delay, a mix of private and public provision of health care shouldn’t be ruled out completely. It is also important that country’s health care doesn’t go in the hands of private health care providers and insurance companies and the focus should remain the primary health care and preventive and curative health care by building up institutions which doesn’t has the biases which go against universal health care.

Durga Shakti Nagpal - a case study in media (& other's ) opportunism

There has been an outpour of public sympathy and uproar in media, especially electronic media, over the shabby manner in which an IAS officer Durga Shakti Nagpal, SDM ,G.B Nagar in UP has been suspended for doing what it seems her duty in a manner which is as per rules. 

Maybe years of slogging in the corridors have rusted me out but I am still trying to figure out the reasons for catching the fancy of the nation (has it or is it just Delhi based e-media & print media?) and what could be the reason for the 'outcry'...

Is it because (notice the bold)....

1. the officer was suspended hastily and without proper procedure for doing her duty and taking on a powerful lobby?;
2. the officer was trying to do her job as per rules and without any fear of the outcome and she is being victimized by the powerful lobby whose interests got hurt in the process?;
3. the officer in question is a lady officer at the start of her career and needed a voice to take up her cause (basic assumption being that she can't protect herself and needed a platform...really? Did she really ask any of us or the Association to take up her cause? Did we have her permission before going overboard? How have we assumed the role of a protector (well, whatever that means) without even having her consent....Its like the victim is being victimized further for being a victim...
4. is it because the injustice meted out to the All India Service officers had gone for too long and a point of no return is reached ("ab bahut hua"..."can't take it anymore" syndrome)?;
5. it happened in a State which is supposed to be ruled by folks who are convenient to mock at (politically/socially/culturally/hierarchy wise) and one stands to earn few brownies in the process?;
6. it turned out very convenient case to be taken up where one can be the custodian of morality, ethics and all other higher virtues one can think of...there weren't any powerful opponents who can hit back?;
7. each of those taking up her cause had an ulterior motive - for e & print media it was instant TRP, a convenient case for most political parties, a time to cash on by the 'Associations' (aap abhi tak kahaan the bhailog?), and almost everybody...you name it and there's a reason...did any of them think about what could be the repercussions of this public hullaballoo on her- the victim in this case?
8. or is it because it happened in a place close to Delhi, in a state which isn't run exactly by a party which is the darling of media and most importantly because it was hyped by the media esp e-media? And everybody rushed in the mad race to cash in instant two days glory at the sheer expense of Durga?
I am sort of convinced its the last reason which is the main trigger. Other may have different opinions and may say that its a mix of some or most of these but I feel its time to introspect.

First, let me highlight the reason for action against her (all of us know but still....)

Whether what Durga did is justifiable and as per rules ?

There are two possible reasons as of why she has been placed under suspension by the UP Government depending upon which side we are talking from.  First - she had taken on the powerful lobby of sand mafia by confiscating tractors/trucks carrying sand illegally and had filed number of cases against those involved in the last six months. The fact that sand is otherwise available toward the mafia for the never ending and in fact ever growing construction activities in and around Delhi so nearby as in G B Nagar (NOIDA), any curb on such mining did hurt those involved financially and they wanted her out. Second – that a compound wall of a religious place was being built unauthorizedly on a Government land and she ordered for its demolition, in accordance with the Supreme Court order. It didn’t mean that she was against that particular religion but just that she followed the rule of law and did what was expected of her. Community activity (including construction) can certainly be taken up on a Government land but proper permission needs to be obtained from the authorities which wasn’t done and thus. However, the possible reason for her suspension, if this really was the cause, was the perceived likelihood by the State Government of communal violence esp on the eve of a major religious festival coming up. I don’t rule out completely that this was the final trigger even though it made a good excuse for her ouster as sought by the sand mafia because the party in power in the State wants itself to be identified by the religious community esp when elections are due shortly and the state government perhaps have nothing to seek their vote for otherwise. The fact remained though that there wasn’t any religious clashes nor was there any likelihood. And it’s almost sickening as to why do we presume that the said community is so susceptible and lack required maturity and wisdom that it will indulge in violence at the slightest pretext, genuine or otherwise?

Durga was absolutely right in what she did in either case and went by the rulebook. To that extent, her suspension is not justified and is almost ridiculous and a mockery of the system that bureaucracy is. There is a well laid out procedure when an All India Service (AIS) officer (IAS,IPS & I Fo S) can be placed under suspension.  Problem is that over the years, the line between AIS officers and other state government officials has been diluted and AIS officers too are getting suspended the same manner in which an assistant or a section officer would be under the circumstances. 

I reiterate that Durga’s suspension is wrong, unjustifiable and is an act of political brazenness and abuse of power and has been done without the application of mind.

However what I am coming to now is whether this is a standalone case? Media, especially electronic media hasn’t stopped debating the issue for the last 10 days and it’s only getting worse. While such acts of injustice meted out honest officers need to be highlighted but hasn’t media gone completely overboard and lost the seriousness of the wider issue which is abuse of the administration by those in power at their will? Hasn’t media actually trivialized the issue by focusing only on Durga? 

There are a number of biases in this case I feel which I would like to raise –

a.      Geographical (Location) bias – would the issue catch a similar attention if it had happened in Manuguru sub division in Khammam district in AP or in any of the sub divisions in the NE states? Clearly, there is a geographical bias because the sub division happened to be NOIDA, next to Delhi and very convenient for the media to focus on; I recall a woman IAS officer in AP who, way back in 1994, did her duty as diligently as it could be and went on to check the house of the state minister while weeding out bogus voters and did deleted few bogus names from that address and what happened? She was promptly transferred out within 3 days. Of course, one didn’t have media those days but am wondering whether it would have been highlighted even today because it happened in a remote subdivision of a distant State?

b.      Political bias – would a similar media outcry happen if it had happened in a state ruled by different political party, say in Bihar or Haryana? There are scores to be settled and instances like these come in very handy to preach a lesson in morality and ethics; and then we have political suckers who are offering her tickets from their party to contest elections! Shameful to say the least.

c.       Media  (media as a judge who delivers instant justice) bias – in order to grab headlines, taking up (or making up) issues which are perceived close to television viewers in taken up with a vengeance. Corruption is an irritating issue for most of the people and the injustice done to an IAS officer because she fought a powerful sand lobby was to be highlighted. However true it might be, hasn’t media judged on its own yet again that this is the reason and is passing judgment on a daily basis? Should it just not raise the issue and leave it there?

          And it's not just electronic media. The print media too have joined the bandwagon, way beyond its mandate I presume to the extent that some have started pledge your support campaign to "save Durga".

        And as I update this today, the frenzy in media is already shifted to some other issue in the neighboring State and she seems to have already been buried in the media annals ....!
 

d.      Gender bias – would media highlight with similar passion if it were to be a male IAS officer? Well, it did in Ashok Khemka’s case but then it was, to my mind, more to do with who he had taken on against and the sheer audacity! There are similar cases of harassment, even worse, happening elsewhere but hardly get the attention. Though, I should also say that I am glad if this bias is there and I am writing it in a positive sense.

       Are some of us trying to tell ourselves that its because it's she - the young, bechari lady officer who needs to be protected?? Really? It's a shame if some of us are trying to forge this logic to suit our end.

e.       Custodian’s (read IAS Association) bias- I noticed, to my great amusement, how the so called office bearers of the IAS Association (which for long had been defunct and most of us had almost forgotten that it even existed) smelled the opportunity fuelled by their appearance on national news channels and decided to take up the cause with great fervor. Intrigued completely and almost feeling lost in stupid confusion, I venture to  guess that they are playing up to the media and while without lowering the seriousness of this instant case, why hasn’t the Association taken up similar cases elsewhere in the country happening to hundreds of Durgas (both men and women officers) who continue to suffer silently!

Seems like everybody is relishing the new found glory and feasting on it, tragically at expense of Durga, whose case they are supposedly espousing for!

Does it mean that the Association shouldn't have done anything and just watched silently? Am thinking...no, it has done the right thing by taking it up in all the right earnest and let the fight continue till its logical conclusion is achieved which is carrying out systemic institutional mechanisms which prevents any such future cases of injustice.

f. Issue (ie corruption & political high handedness) bias - there are officers who have taken up the cause of uprooting of tribes, destruction of forests/green cover, encroachment in urban areas, lack of facilities in government managed hostels and so on and have suffered because of taking on with the well-oiled system. Their injustice has hardly be high highlighted ever. What makes this case so special that more than 80% of the prime time in mainstream electronic media has been hogged by it for more than 10 days now? If corruption or fight against it is perceived to be so close to our heart (read - middle and upper middle class urban citizens who like to discuss corruption in their drawing rooms over a class of scotch and condemn the system routinely in any case), why at her expense? Do we realise the long term negative consequences it will have on her career? Does she have no right of privacy? It's disgusting how everybody has donned upon themselves the responsibility of teaching a lesson to "a stubborn/brazen/insensitive" State Government at whatever cost it might have! It's a typical case of 'we are responsible for what's visible and easily accessible and what's not doesn't exist (India outside Delhi (including NOIDA/Gurgaon etc))'.

Media has yet again donned upon itself the role of a judge who wants to deliver justice instantly and will carry on the bizarre blare till such time it brings the State Government on its knees and make it do what media thinks is the judgment. And we have too many folks around who would do anything to appear in these primetime ‘page 3’ type pseudo-intellectual debates and will always try to toe the line of the composer.  It’s almost funny. And I am sick of watching the same debate, same arguments and same moral beating of the State Government and the so-called those responsible. For god sake, you have made your point and let the State Government take a call. Carrying the issue to such ridiculous levels will only make it stubborn and it will ultimately become a political or a religious issue. And it certainly won’t help Durga and the likes.

it's almost amazing how everybody around is trying to vent out his/her frustration against the system/corruption/one's own inadequacies/one's own sense of injustice meted out at some point at sheer expense of Durga Shakti.

I feel sad for Durga.  Amidst all this hara-kiri by the media and those playing to the gallery, I feel its she who stands to lose the most. She joined the service couple of years ago and it’s her first posting. Once branded as somebody who could be a ‘potential trouble maker’ for those in power (however much she might not like or isn’t this way), she would always be getting postings which are considered unimportant. Take the case of Khemka. He is my batch mate and one of the brightest and most promising officers of the batch. I would in fact say that there aren’t many in our batch who can match his intelligence, dedication and an absolute clarity of the rule position but look where he has landed.  Officers like Khemka and Durga deserve much better and the danger with other trying to grab lime light /publicity/TRP ratings at their expense is that ultimately, Durgas and Khemkas suffer due the such extreme over exposure while media happily moves on to the next ‘breaking news’ conveniently dumping them once the catch appeal loses its sheen.

Do we, the common viewer realise that however much browbeating we do against the State Government and call the action by whatever adjective we use (depending upon our mood or frustration or political affiliation), it is their prerogative and nothing much can be done. The best course, in my view could have been to bring out the issue and leave it there, without aggravating it as a matter of prestige or a drive to teach the stubborn State Government a lesson. The State Government could have considered the representation of the aggrieved officer and reinstate her without any delay. Now, the issue seems to have gone much beyond common sense and has drawn swords on both sides.

I wish media could draw a line and play a more sensible mature reporting and in a manner where it doesn’t harm these honest officers. I also wish that others too don’t play to the gallery to settle their own frustrations against the system (remember- Durga while being a part of the system is not a system and we have no right to jeopardize her career at our sweet expense) and in a manner which reflect short sightedness, immaturity and tinkering with a system in the momentary heat of delivering instant justice. We are talking about a system which, thanks to the negligence by all concerned, has been rotting and is almost taken for granted for all its ills. What’s required is far reaching institutional changes which would ultimately prevent harassment of honest and upright officers throughout the country even as they work silently away from the limelight.


PS - The Supreme Court on Friday (Aug 16, 2013) rebuffed an attempt to "espouse the cause" of suspended IAS officer Durga Shakti Nagpal and dismissed a PIL seeking her reinstatement by a judicial order. Refusing to entertain the PIL by a Delhi lawyer, a Bench led by Justice H L Dattu noted that Nagpal could take care of herself and that she would resort to all proper administrative and judicial recourse if she so wanted. It told Sharma that if the suspension order was against the spirit of the court orders and also contemptuous, then Nagpal and not he should question the state's action. It added: "Why can't she file a petition? If she files it, we would entertain it. You cannot be espousing her cause."