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Policy&Politics

Civil Services recruitment process, training needs reform

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Another Civil Services day has passed. Varied people gather to give speeches on this day, and request the Civil Servants to take the country forward, that was a euphemism for not obstructing it.

A former President, the present Prime Minister, and hordes of people from the technical field, creative people in pursuit of India’s development, reformers, teachers, and businessmen are always very anxious about the quality of people inducted into services to implement the policies of the government. People who had had a rendezvous with Civil Servants have been very critical of them and indicted them also to have been responsible for holding the progress of the country.

Civil Services in India suffer from a far deeper malaise than normal citizens know and feel. The common citizenry has got so accustomed to the daily grind and its problems that an abysmal quality of life imposed on them seems normal, and they’re completely oblivious of the people who are responsible for it.

The issues that the Civil Servants face in India are related to everything one can imagine— from the quality of intake to their training, their working inefficiency, their commitment towards the country and its people, and most importantly the way their non-accountability for everything they do derail the progress of the country.

The different questions that are asked include: Do the Civil servants act as Civil servants or Masters? Do they really care for the services or people? Do they still have colonial-type thinking? Don’t they enjoy without accountability at the expense of taxpayers’ money? Does the present system of selection for the Civil Services Examination (CSE) conducted by UPSC do justice to fulfilling the objective of choosing candidates with some ethical standards? Does it recruit the best talent or better still best attitudinal traits? Is a 3-hour examination on Ethics, Integrity, and Aptitude and Interview adequate to test the character of candidates? Is it really needed to have different services? Why can’t a common pool of candidates be selected and then allocated services based on their aptitude, interest, and performance? Do the Civil Services aspirants know how narratives can harm the country and do they have their observations sharp enough to identify it? What are sleeper cells and their roles in perception management? What are the differences and cross-cultural comparisons emanating out of the use of words considered to be synonymous like Dharma and religion, spirituality and religion, temple and mandir, pooja and worship?

The Indian Civil Servant is a fatal mix of contradictions having some very favourable as well as the obnoxious mix of characteristics to run or “down run” the country and these characteristics are both acquired and inherited.

No institution has harmed the country more than the British legacy of Civil Services. When the ancient Chinese decided to live in peace, they made the Great Wall of China. They thought no one could climb it due to its height.

During the first 100 years of its existence, the Chinese were invaded thrice, and every time, the hordes of enemy infantry did not need to penetrate or climb over the wall, because each time they bribed the guards and came through the doors.

The Chinese built the wall but forgot the character-building of the wall guards.

This is what the Civil Services in India are. They are the wall built to protect, but, they allow to demolish every wall, that may be created, and they can be fatally apathetic to the feeling of India and a true epitome of what the British wanted to do and what they left behind, a true reflection of colonial powers’ intention to bring about a thorough mismatch between India and its structures.

A statesman rightly pointed out, “India has the most lethal missile, indestructible but capable of destructing everything efficient but capable of delaying any progress, it is called the Civil Servant—it doesn’t work and can’t be fired.”

THE PRESENT BUREAUCRACY

It is indeed an irony that the country has progressed and has grown up, looked up, brightened up and still moving forward. Even though we may not have tasted development, but at least we tasted growth, and all this despite the bureaucracy. The Indian economy has grown despite the bureaucracy. The bureaucracy has not managed the aviation sector despite the enormous inertia being available by way of Air India… so what? Air India may have been ruined, but the aviation sector developed without bureaucracy. The bureaucracy has almost completely devastated the Shipping Industry… so what? Indian exports have picked up. HEC Ranchi, and other public sector units have fallen from grace… so what? A lot of state-of-the-art industrial centres have come up that mock HEC. Every road-block the bureaucracy can put up, despite that the road transport has shown growth— qualitative as well as quantitative. The Indian software industry has exploded, despite the bureaucracy, and the quality of ‘education’ (read information and literacy) has improved at least quantitatively if not value-wise, despite the bureaucracy. The Milk Revolution, the Amulya experiment headed by V. Kurien, the Telecom revolution orchestrated by Sam Pitroda, Satellite and Space Technology growth directed by ISRO, the UID and Aadhar conceptualised and implemented by Nandan Nilekani, The Konkan coastal Railway, the Metro by E. Sridharan all grew up only because there was no bureaucratic involvement. Many sectors have shown an improvement despite obstacles put by bureaucracy. Had the bureaucracy only worked, not obstructed the work, the Country would have been a much better place to live in.

It is left to anyone’s imagination what would have happened with a responsive, efficient bureaucracy having a feeling for the country and its people, and what would have been done. The country’s economy would have shown progress unparalleled in the whole of Asia, and we would have been a power to reckon with.

Ceteris paribus, one of the reasons is the selection process. The chosen candidates are billed as the best talents we have, but is it the talent that has to be enough for bureaucracy or attitude?

HOW ARE THE CIVIL SERVANTS RECRUITED?

The already selected candidates selected out of the present procedure need not be made to think that they are the most talented candidates, because they do not supplement it with their ability and attitude to administering. Is it not that talent without an aptitude, attitude, and without any value cannot take the country forward?

The Civil Servants need to be learners not judgmental, but must have a sense of judgment based on their capability of logical and emotional differentiation.

The anomaly between what is required and what is tested. So we have grown despite bureaucracy. There are reasons to believe that. There are two aspects to consider here, despite the prevalence of terrific talent, why do we lag in taking the best administrators in bureaucracy and second, after selection, why do even the best become unfit for the country, unresponsive to the people and obstructive. To a large extent, the selection process has to be blamed. There are grave anomalies between traits required and the selection procedure prevalent.

A trait that is required for selection into bureaucracy is an attitude for administration but what is tested is examination technique, a trait that is needed for selection into bureaucracy is administration ability, and what is tested is information base; if the requirement is empathy for the people, the chosen candidates are trained to be arrogant, if the requirement is honesty, there are minimal ways of evaluating their ethical dimension, where the trait required is objectivity, the selection has no means to prevent students who have taken all their decisions based on perception and rumors, when the selected people require to have an understanding for their country and who know their country and feel for the people, the candidates who come out of academy are a replica of their colonial masters and which during their training got even more strengthened in the Academy.

Why does this happen? The selection and the training procedure are still very colonial.

The Bureaucracy is protected by Articles 311 and 312, meaning that even for their deadliest mistakes, deliberate mistakes they will not be punished and they are not accountable. In a situation where the country is, where PM is accountable the MPs are accountable, the teacher is accountable, the technocrat is accountable, and the creative people are accountable why the Civil Services, in particular, the IAS cannot be accountable? Once recruited, they do take the country and its people for granted.

Moreover, how does the same examination test the candidates for different services, which require different aptitudes and attitudes for different services like IAS, IFS, IPS, IRS, and that too through one single examination? Even this exam doesn’t test the candidates for their personality and their administrative ability but rather their memory and examination presentation techniques.

We take talent, but forget whether that exceptional talent has character and values or not. We forget the basic dictum, “Values and Morality can compensate for an intellectual and talent shortage, but talent and intelligence can never make up for lack of values and morality”

WHAT CAN BESUGGESTED?

It is in this light that the government’s decision to accord merit list, services and cadre after their training in Foundation Course that holds some meaning and credence. It is a prudent idea provided the training at Foundation Course gets modified and is reformed to an extent as not to allow the training candidates to have a ‘paid holiday’ and does not become subjective.

There are three stages of reform that are needed to prevent UPSC from being called as “Unpredictable Public Service Commission”.

Everything is ok at the prelims stage except for the fact that it has been so unpredictable that no one is sure that even a single mistake can cost their attempt to help the poor souls to restart an arduous journey of insipid preparation for one more year. The quality of intake also leaves a lot to be desired and becomes a gamble of sorts to prevent even the best of administrative talents to sit out. A good idea then will be the reintroduction of options to make three tests, instead of two, one for optional and two papers of CSAT. Optional will help some really good students who lack in test techniques, but with observational analytical skills to find their way. The significance of knowledge will be reinforced, and whichever way the student has academically lived till his graduation. Of course, the chance factor will be minimized and UPSC’s job also made easy. This suits easy identification of talent as well. As of now, the prelims exam has become more of a gamble because the margin of error, in this case, is so low. So much so that even within a range of 1 mark more than 10000 students can be weeded out, So it has become more a test of exam practice, a test of elimination rather than any effective aptitude test. It serves no purpose other than to eliminate some of the brightest students as well.

At the Mains level, there have been a good number of innovations in the type of questions asked that are good and relevant, but what the students are doing is they are packing their facts in a sack and depositing it to get marks. The test of language, flow, coherence of thoughts, analysis and its ability to go deep are not tested. This should precisely not be the hallmark of a candidate’s ability, indeed what is tested very well is the student’s ability to pack facts in their answers like jute sacks. The structure of the question paper needs to be changed to include not only 150-word answers but also one 600-word, two 400 words, three 300 words, and many 150 and 100 and 50 words as well. This will test many aspects of candidates and expose their ability as well. The examiners also have to be instructed and trained to check the language, analysis, coherence, and arrangement that is a part of the answer and not only the facts arranged in disarranged manner. The answer has to be checked in a manner that the students can’t be doctored in a coaching institute and masquerade themselves as knowledgeable students.

At the Interview level, major reform is required. The Interview at present by one single board doesn’t do justice to the selection procedure. A half an hour is not enough to test the personality of the candidate. There are two options— the best option is making it in the form of CDS and NDA. Here a candidate is kept for five days and observed intricately. Isn’t it ironical that the selection procedure for the CDS and NDA is more stringent than the people whose dictates they need to follow and whose decision imposition lacks coherence, rationality, and ethics? The other is making the personality test two stages conducted by two different boards with a greater allocation of marks with as much weightage as Mains marks. This will be a far better method to check the administrative abilities and associated attitude.

Finally, in the training stage for foundation, the training procedure must be completely revamped, extended, and restructured. A three-month training may not be sufficient to assign services to candidates and understand either their administrative abilities, policing capabilities, diplomatic understandings and underpinnings, negotiation abilities or accounting abilities. Service allocation has some objectivity imparted when the candidates are closely scrutinized for more than 3 months to allocate different services based on their attitude, interest, and desirability.

The best suggestion perhaps will be to recruit the potential Civil Servants at the grass-root level after +2, keep them in-field training for three years, and give them a degree in Administration in the same manner as Graduation. This way the chosen candidates can be trained and guided in a manner that the country requires them to be. They will be less arrogant, more flexible, and more empathetic, and since they would have gone through the lowest hierarchy to the one hierarchy where they are recruited now, they will understand the problems better.

Also, they can be made to understand the country better and they will be a far better candidate to learn. They will also be far more flexible and far more responsive with all the traits required in bureaucracy that can be easily poured into them.

Any argument against this has to take into account whether the 35 years of service to the country is more important than the three years of difficulty in making them. Whatever the difficulties in revamping, the whole selection procedure is more worthy.

The writer is a strategic thinker, educationist, earth scientist, author, mentor, and advisor to various governments. Views expressed are the writer’s personal.

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Policy&Politics

Govt extends date for submission of R&D proposals

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The Government has extended the deadline for submission of proposals related to R&D scheme under the National Green Hydrogen Mission. The R&D scheme seeks to make the production, storage, transportation and utilisation of green hydrogen more affordable. It also aims to improve the efficiency, safety and reliability of the relevant processes and technologies involved in the green hydrogen value chain. Subsequent to the issue of the guidelines, the Ministry of New & Renewable Energy issued a call for proposals on 16 March, 2024.

While the Call for Proposals is receiving encouraging response, some stakeholders have requested more time for submission of R&D proposals. In view of such requests and to allow sufficient time to the institutions for submitting good-quality proposals, the Ministry has extended the deadline for submission of proposals to 27th April, 2024.

The scheme also aims to foster partnerships among industry, academia and government in order to establish an innovation ecosystem for green hydrogen technologies. The scheme will also help the scaling up and commercialisation of green hydrogen technologies by providing the necessary policy and regulatory support.

The R&D scheme will be implemented with a total budgetary outlay of Rs 400 crore till the financial year 2025-26. The support under the R&D programme includes all components of the green hydrogen value chain, namely, production, storage, compression, transportation, and utilisation.

The R&D projects supported under the mission will be goal-oriented, time bound, and suitable to be scaled up. In addition to industrial and institutional research, innovative MSMEs and start-ups working on indigenous technology development will also be encouraged under the Scheme.

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Policy&Politics

India, Brazil, South Africa to press for labour & social issues, sustainability

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The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

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Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

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India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

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Policy&Politics

ONLY 2-3% RECOVERED FROM $2-3 TN ANNUAL ILLEGAL TRADE THROUGH BANKING: INTERPOL

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However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

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Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

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Finance Minister Nirmala Sitharaman defended the Atal Pension Yojana (APY) against Congress criticism, asserting its design based on choice architecture and a guaranteed minimum 8% return. She emphasized the scheme’s opt-out feature, facilitating automatic premium continuation unless subscribers choose otherwise, promoting retirement savings. Sitharaman countered Congress allegations of coercion, stating the APY’s guaranteed returns irrespective of market conditions, supplemented by government subsidies.

Responding to Congress’s claim of scheme misuse, Sitharaman highlighted its intended beneficiaries – the lower-income groups. She criticized Congress for its alleged elitist mindset and emphasized the scheme’s success in targeting the needy. Sitharaman accused Congress of exploiting vote bank politics and coercive tactics, contrasting it with the APY’s transparent framework. The exchange underscores the political debate surrounding social welfare schemes, with the government defending its approach while opposition parties raise concerns about implementation and efficacy.

Finance Minister Nirmala Sitharaman’s robust defense of the Atal Pension Yojana (APY) against Congress criticism highlights the ongoing debate over social welfare schemes in India. Sitharaman’s assertion of the APY’s design principles, including its opt-out feature and guaranteed minimum return, underscores the government’s commitment to promoting retirement savings among lower-income groups. The Atal Pension Yojana, named after former Prime Minister Atal Bihari Vajpayee, was launched in 2015 to provide pension benefits to workers in the unorganized sector. It aims to address the significant gap in pension coverage among India’s workforce, particularly those employed in informal and low-income sectors. The scheme offers subscribers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on their contribution and age at entry, after attaining the age of 60. Sitharaman’s response comes after Congress criticism alleging the APY’s inefficacy and coercive tactics in enrolment.

Congress General Secretary Jairam Ramesh described the scheme as poorly designed, citing instances of subscribers dropping out due to unauthorized account openings. However, Sitharaman refuted these claims, emphasizing the APY’s transparent and beneficiary-oriented approach. The finance minister’s defense focuses on three key aspects of the APY: Choice Architecture: Sitharaman highlights the opt-out feature of the APY, which automatically continues premium payments unless subscribers choose to discontinue.

This design element aims to encourage long-term participation and ensure consistent retirement savings among subscribers. By simplifying the decision-making process, the scheme seeks to overcome inertia and promote financial discipline among participants. Guaranteed Minimum Return: Sitharaman underscores the APY’s guarantee of a minimum 8% return, irrespective of prevailing interest rates. This assurance provides subscribers with confidence in the scheme’s financial viability and incentivizes long-term savings.

The government’s commitment to subsidizing any shortfall in actual returns further strengthens the attractiveness of the APY as a retirement planning tool. Targeting the Needy: Sitharaman defends the predominance of pension accounts in lower income slabs, arguing that it reflects the scheme’s successful targeting of its intended beneficiaries – the poor and lower-middle class. She criticizes Congress for its alleged elitist mindset and suggests that the party’s opposition to welfare schemes like the APY stems from a disconnect with the needs of marginalized communities. Sitharaman’s rebuttal also addresses broader political narratives surrounding social welfare policies in India.

She accuses Congress of exploiting vote bank politics and coercive tactics, contrasting it with the transparent and inclusive framework of the APY. The exchange underscores the ideological differences between the ruling Bharatiya Janata Party (BJP) and the opposition Congress, with each side advocating for their vision of social welfare and economic development. In addition to defending the APY, Sitharaman’s remarks shed light on the broader challenges and opportunities facing India’s pension sector.

Despite significant progress in expanding pension coverage through schemes like the APY, the country still grapples with issues such as financial literacy, informal employment, and pension portability. Addressing these challenges requires a multifaceted approach involving government intervention, private sector participation, and civil society engagement.

As India strives to achieve its vision of inclusive and sustainable development, initiatives like the APY play a crucial role in promoting economic security and social equity. Sitharaman’s defense of the scheme underscores the government’s commitment to addressing the needs of vulnerable populations and ensuring their financial well-being in the long run.

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Economic

Regulatory steps will make financial sector strong, but raise cost of capital

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India’s financial system regulator, the Reserve Bank of India (RBI), is demonstrating a serious commitment to improving governance and transparency at finance companies and banks, with the RBI’s recent measures aimed at curtailing lenders’ overexuberance, enhancing compliance culture and safeguarding customers.

While the global ratings firm has appreciated the RBI’s “diminishing tolerance for non-compliance, customer complaints, data privacy, governance, know-your-customer (KYC), and anti-money laundering issues”, it has cautioned that increased regulatory risk could impede growth and raise the cost of capital for financial institutions. “Governance and transparency are key weaknesses for the Indian financial sector and weigh on our analysis. The RBI’s new measures are creating a more robust and transparent financial system,” says S&P Global Credit Analyst, Geeta Chugh. “India’s regulator has underscored its commitment to strengthening the financial sector. The drawback will be higher capital costs for institutions,” Chugh cautions.

The RBI measures include restraining IIFL Finance and JM Financial Products from disbursing gold loan and loans against shares respectively and asking Paytm Payments Bank (PPBL) to stop onboarding of new customers. Earlier in December 2020, the RBI suspended HDFC Bank from sourcing new credit card customers after repeated technological outages. These actions are a departure from the historically nominal financial penalties imposed for breaches, S&P Global notes.

Besides, as the global agency points out, the RBI has decided to publicly disclose the key issues that lead to suspensions or other strict actions against concerned entities and become more vocal in calling out conduct that it deems detrimental to the interests of customers and investors. “We believe that increased transparency will create additional pressure on the entire financial sector to enhance compliance and governance practices,” adds Chugh. The global agency has also lauded the RBI’s recent actions demonstrating scant tolerance for any potential window-dressing of accounts.

These actions include the provisioning requirement on alternative investment funds that lend to the same borrower as the bank finance company. Amidst the possibility of some retail loans, such as personal loans, loans against property, and gold loans getting diverted to invest in stock markets and difficulty of ascertaining the end-use of money in these products, S&P Global underlines the faith of market participants that the RBI and market regulator, the Securities and Exchange Board of India, want to protect small investors by scrutinizing these activities more cautiously.

On the flip side, at a time of tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025 (year ending March 2025). “We expect loan growth to decline to 14 per cent in fiscal 2025 from 16 per cent in fiscal 2024, reflecting the cumulative impact of all these actions,” says Chugh. The other side of the story is that stricter rules may disrupt affected entities and increase caution among fintechs and other regulated entities and the RBI’s decision to raise risk weights on unsecured personal loans and credit cards may constrain growth. Household debt to GDP in India (excluding agriculture and small and midsize enterprises) increased to an estimated 24 per cent in March 2024 from 19 per cent in March 2019. Growth in unsecured loans has also been excessive and now forms close to 10 per cent of total banking sector loans.

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