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O C www.indiatoday.in OCTOBER8,2018 `60 9 7 7 0 2 5 4 8 3 9 9 0 9 T N E M Y A P E R P T U O H T WI T S O P O T D E S N E C LI 9 1 - 7 1 0 2 / 5 0 / D A B A D RI A F 0; 2 - 8 1 0 2 / 8 8 - ) C ( U 0; 2 - 8 1 0 2 / 8 6 0 6 / 1 1 - ) D N ( L D O. N D E R E T S GI E R 5 7 / 7 8 5 8 2 O. N NI R TWIST IN THE TALE WAS ANIL AMBANI R 59,000 CRORE RAFALE DEAL? REVELATIONS PUT THE MODI GOVERNMENT ON THE MAT DIGITAL EDITION THECHALLENGES THEBIG TRENDSINPOLL-BOUNDSTATES OC OFJUSTICEGOGOI www.indiatoday.in OCTOBER8,2018`60 9770254839909 RNI NO. 28587/75 REGISTERED NO. DL(ND)-11/6068/2018-20; U(C)-88/2018-20; FARIDABAD/05/2017-19 LICENSED TO POST WITHOUT PREPAYMENT TWIST IN WFWCFFAEIESTLAHEHREEEBPORAUNANJATODSRSBEMWLTEOAHRELTTVEKTESHSENAIIIOCSVVONUEER DDSELWGEHETTS TH LE WWAASSANI OUU INTTTHHHHHEEEEE , 0CRORE RAFALED AL?FRESH REVVEELLAATTIIOONNSSPPUUTTTTHHEEMMOODDII GOVERNMENTONTHEMAT EXCLUSIVE MULTIMEDIA CONTENT ONLY FOR IPAD COVER STORY THE AMBANI NATION MOOD SWINGS ASSEMBLY POLLS BATTLE FOR THE MIDDLE ASSEMBLY POLLS RAJE HAS A BIG FIGHT ON HER HANDS THE BIG STORY A JUDGE WITH A DIFFERENCE #TheAmbaniConnection SUBSCRIBE NOW www.indiatoday.in/digitalmagazines FROM THE EDITOR-IN-CHIEF www.indiatoday.in EDITOR-IN-CHIEF: Aroon Purie GROUP EDITORIAL DIRECTOR: Raj Chengappa T hedogfightoverthepurchaseof nothing to do with Ambani being chosen as EDITOR: Ajit Kumar Jha (Research) 36 Rafale planes currently domi- an ofset partner for Dassault as it was the GROUP CREATIVE EDITOR: Nilanjan Das; GROUP PHOTO EDITOR: Bandeep Singh MANAGING EDITORS: Kai Jabir Friese, Rajesh Jha nating public discourse in the Indian government which had proposed EXECUTIVE EDITORS: Damayanti Datta, S. Sahaya Ranjit, country reminds me of the dic- his name. And the Indian government all Sandeep Unnithan DEPUTY EDITORS: Prachi Bhuchar, Uday Mahurkar, Manisha Saroop tum, ‘Don’t confuse me with facts’. National along had been vehemently insisting that it MUMBAI: M.G. Arun HYDERABAD: Amarnath K. Menon CHANDIGARH: Asit Jolly leaders are calling each other thieves, liars, was Dassault’s decision, not theirs. A flurry SENIOR EDITORS: Shweta Punj, Sasi Nair, Alokparna Das JAIPUR: Rohit Parihar traitors and, of course, corrupt. Even Paki- of unconvincing denials ensued, with both SENIOR ASSOCIATE EDITORS: Kaushik Deka, Ashish Mukherjee MUMBAI: Suhani Singh, Kiran Dinkar Tare; PATNA: Amitabh Srivastava stan and the current and a former president governments saying they had nothing to do ASSOCIATE EDITORS: Shougat Dasgupta, Chinki Sinha of France have been dragged into the im- with Dassault’s choice. KOLKATA: Romita Sengupta; BHOPAL: Rahul Noronha; THIRUVANANTHAPURAM: Jeemon Jacob; BEIJING: Ananth Krishnan broglio. The two national parties seem to be Add to this heady cocktail are several ASSISTANT EDITOR: PUNE: Aditi S. Pai PHOTO DEPARTMENT: Vikram Sharma (Deputy Photo Editor), like two blindfolded boxers punching in the other controversial issues. What is the real Rajwant Singh Rawat, Yasir Iqbal (Principal Photographers), air hoping to land a knockout punch. A lot price of the aircraft? Is it cheaper than the Chandra Deep Kumar (Senior Photographer); MUMBAI: Mandar Suresh Deodhar (Chief Photographer), Danesh Adil Jassawala (Photographer); of half-truths are flying around, with facts one negotiated by the UPA government six KOLKATA: Subir Halder (Principal Photographer); CHENNAI: N.G. Jaison (Senior Photographer) becoming the biggest casualty. In the eye of years ago? Was it fully loaded or not in the PHOTO RESEARCHERS: Prabhakar Tiwari (Chief Photo Researcher), the storm is industrialist Anil Ambani. price? Why did we buy 36 aircraft instead of Saloni Vaid (Principal Photo Researcher), Shubhrojit Brahma (Senior Photo Researcher) The controversy is centred around the the 126 in the original UPA contract? Why CHIEF OF GRAPHICS: Tanmoy Chakraborty ART DEPARTMENT: Sanjay Piplani (Senior Art Director); Rs 30,000 crore ‘ofsets’ that Dassault and was HAL excluded from the deal when it Angshuman De (Art Director); Devajit Bora (Deputy Art Director); its associates have to spend with Indian was there originally? Did the prime minis- Vikas Verma (Associate Art Director); Bhoomesh Dutt Sharma (Senior Designer) manufacturers not necessarily related to ter short-circuit the purchase procedures of Siddhant Jumde (Senior Illustrator) PRODUCTION DEPARTMENT: Harish Agarwal (Chief of Production), the Rafale aircraft as part of the Rs 59,000 the government? Our cover story, written Naveen Gupta (Chief Coordinator), Vijay Kumar Sharma (Senior Coordinator) crore Rafale deal. The allegation is that the by Executive Editor Sandeep Unnithan, a PUBLISHING DIRECTOR: Manoj Sharma younger Ambani’s joint venture with Das- defence expert who has written extensively ASSOCIATE PUBLISHER: Anil Fernandes (Impact) sault has been favoured with all of the on the subject, tackles all these prickly ques- IMPACT TEAM Rs 30,000 crore because of his perceived tions to bring some sanity to the debate. Senior General Manager: Jitender Lad (West) General Manager: Mayur Rastogi (North), proximity to Prime Minister Narendra Meanwhile, Rafale has become the basis Upendra Singh (Bangalore), Kaushiky Gangulie (East) Modi. The suggestion that his company of one messy political slugfest although GROUP CHIEF MARKETING OFFICER: Vivek Malhotra Assistant General Manager: Garima Prashar (Marketing) is getting all of it is not true. There are 72 there is no clear evidence of middlemen or SALES AND OPERATIONS: D.V.S. Rama Rao, Chief General Manager companies that have been identified by the bribes being paid. There are no Swiss bank Deepak Bhatt, General Manager (National Sales) Vipin Bagga, Deputy General Manager (Operations) French industrial partners in the deal— accounts or money trail like the Bofors Rajeev Gandhi, Regional Sales Manager (North) Safran, Thales, Dassault Aviation—for scandal. Besides, all these contracts will the ofset. Ambani is likely to get a decent come to fruition only in three to five years’ share, but the biggest beneficiary will be the time. Regardless, the Congress party sees a government organisation DRDO, or the De- chink in Prime Minister Narendra Modi’s fence Research and Development Organisa- shiny armour of probity and his proud boast tion, with an estimated Rs 9,000 crore. of running a government free of corruption Volume XLIII Number 41; For the week The other big issue is that Ambani has or crony capitalism. Exactly what candidate October 2-8, 2018, published on every Friday no track record in defence manufacturing Modi had accused the UPA government of ● Editorial/Corporate Office Living Media India Ltd., India Today Group Mediaplex, FC-8, Sector-16A, Film City, Noida - 201301; Phone: 0120-4807100 and has several failed ventures attached to in the 2014 general election. As the election ● Subs criptions: For assistance contact Customer Care India Today Group, B-45, Sector-57, Noida (UP)-201301; Phones: Toll-free number: 1800 1800 100 (from his name. Most of his group companies are season draws upon us, Rahul Gandhi is now BSNL/MTNL lines); (95120) 2479900 from Delhi and Faridabad; (0120) 2479900 from Rest of India (Monday-Friday, 10 a.m.-6 p.m.); Fax: (0120) 4078080; in poor financial health and laden with a attempting a Modi on Modi. Whether any Mumbai: 022-66063411/3412, Kolkata: 033-40525327, Chennai: 044-24303200; e-mail: [email protected] debt of Rs 1.12 lakh crore as of March 2018. of this will stick and become an election is- ● Sales: Direct all trade enquiries to General Manager (Sales), Living Media India Limited, B-45, Sector 57, Noida-201301 (UP) As if that were not enough, there are sue is an open question. It has definitely put ● Regd. Office: K-9 Con naught Circus, New Delhi-110001 ● Impact Offices: 1201, 12th Floor, Tower 2 A, One Indiabulls Centre, (Jupiter some dubious ‘coincidences’. He incorporat- the BJP on the backfoot. Mills), S.B. Marg, Lower Parel (West), Mumbai-400013; Phone: 66063355; Fax: 66063226 ● E-1, Ground Floor, Videocon Towers, Jhandewalan Extn, ed his defence company only 12 days before This kind of mudslinging also does not New Delhi ● Guna Complex, 5th Floor, Main Building, No.443, Anna Salai, Chennai-600018; Phone: 2847 8525 ● 201-204 Richmond T owers, 2nd Floor, the Rafale deal was announced on April bode well for India’s much-needed defence 12, Richmond Road, Bangalore-560025; Phones: 22212448, 22213037, 22218343; Fax: 22218335; ● 52, Jawaharlal Nehru Road, 4th Floor, 10, 2015. Raising some more eyebrows was purchases. Since it’s a government to gov- Kolkata-700071; Phones: 22825398; F ax: 22827254; ● 6-3-885/7/B, S omajiguda, Hyderabad-500082; Phone: 23401657, 23400479, 23410100, 23402481, the fact that his entertainment company ernment agreement on the PM’s initiative, 23410982, 23411498; Fax: 23403484 ● 39/1045, Karakkatt Road, Kochi 682016; Phones: 2377057, 2377058 ; Fax: 2377059 ● 2/C, “Suryarath Bldg”, 2nd Floor, part-financed a film produced by actor Julie the best course is transparency. Bring out all Behind White House, Panchwati, Office C.G. Road, Ahmedabad-380006; Phone: 26560393, 26560929; Fax: 26565293 ● Copyright Living Media India Ltd. All Gayet, partner of former French President the facts and the rationale in an impartial rights reserved througho ut the world. Reproduction in any m anner is p rohibited. Printed and published by Manoj Sharma on behalf of Living Media Francois Hollande who signed the Rafale manner. Sunlight is the best sanitiser. India Limited. Printed at Thomson Press India Limited, deal, and issued a press release during Hol- 18-35 Milestone, Delhi Mathura Road, Faridabad-121007, (Haryana) and at A-9, Ind ustrial Complex, Maraimalai N agar, District lande’s visit to India on January 26, 2017. Kancheepuram-603209, (Tamil Nadu). Published at K-9, Connaught Circus, New Delhi-110001. Editor: Raj Chengappa. To make matters worse, Hollande lit a fuse ● IN DIA TODAY does not take the re sponsibility for returning unsolicited publication material. last week when, in response to a query by All disputes are subject to the exclusive jurisdiction of French website Mediapart, he said he had (Aroon Purie) competent courts and forums in Delhi/New Delhi only OCTOBER 8, 2018 (cid:3)INDIA TODAY (cid:3)1 I N S I D E UPFRONT LEISURE WHAT AILS AYUSHMAN TABLE TALK BHARAT? PG 4 PG 55 BOOKS: INSIDE THE TRUMP Q&A: DEEPA MEHTA WHITE HOUSE PG 12 PG 64 PRE-POLL SURVEY 20 COVER STORY 32 DOWN TO COCKPIT CRISIS THE WIRE Allegations that Anil Ambani’s Rajasthan wants change, MP could go company was favoured in the either way while Chhattisgarh will be a Rs 59,000 crore Rafale deal have close call, finds the India Today-Axis survey the Modi government in a spot HEALTH 46 HEART OF THE MATTER On World Heart Day 2018, the 10 commandments for your physical and mental well-being NEW CJI 42 JUDGMEN DAY What to expect as Ranjan Gogoi gets set to take charge of the Supreme Court COVER:Photo illustration by BANDEEP SINGH Readers are recommended to make appropriate enquiries before sending money, incurring expenses or entering E-MAIL to: into commitments in r elation to any advertisement appearing in this publication. The India Today Group does not vouch for any claims made by the advertisers of products and services. The printer, publisher, editor-in-chief and [email protected] or the editor of the India Today Group publications shall not be held liable for any consequences in the event of such log on to www.indiatoday.in claims not being honoured by the advertisers. FOR SUBSCRIPTION ASSISTANCE, CONTACT: Customer Care, India Today Group, B-45, Sector-57, Noida (Uttar Pradesh)-201301. Phones: 2479900 from Noida, 95120- 2479900 from Delhi and Faridabad, and 0120-2479900 from Rest of India. Toll Free No.: 1800 1800 100. Fax: 0120-4078080. E-mail: [email protected] 2 (cid:3)INDIA TODAY OCTOBER 8, 2018 GROUND ZERO Misire and Fury With the latest slugfest, both India and Pakistan have painted themselves into a corner from which there are very few rational choices left RAJ CHENGAPPA L ike a Greek tragedy,everynewplayscriptedby fendingstampswereissuedinJulywhenKhanwasnotin India and Pakistantoimproverelationsbetween power,anditisamassiveintelligencefailureifIndiahas them ends up witheitherasadorbadending.That discoveredthemonlynow.Asregardsattacksonsecurity narrative hasn’tchangeddespitetheemergenceofa personnel,theBSFsoldierwasfounddeadwithhisthroat new actor on thescene:ImranKhan.Thecricket- slitontheInternationalBorder(IB)adaybeforeIndia ing legend-turned-politicianandnowprimeministerof acceptedthetalksoffer.Theonenewdevelopmentwasthe Pakistan had complainedduringhiselectioncampaignthat abductionandkillingofthreeJammuandKashmirpolice- he was portrayed in IndiaasaBollywoodvillain.Khanwas men.Butgiventhattherehasbeenaseriesofsuchincidents being presumptuous. ManyIndianexpertsregardedhimas intheValleyintherecentpast,theIndiangovernment’s a sidekick of the PakistanArmychiefQamarJavedBajwa, knee-jerkreactionremainspuzzling. whom they consider thebigbaddie. Indiansourcesclaimthatourintelligenceagencieshad Backed by the PakistanArmy,Khanrodetopower solidevidencethatPakistan-supportedterrorgroupshad on the plank of forging a‘Naya(new)Pakistan’,ridding killedthethreepolicemenintheValleytodisrupttheforth- the country of corruptionandsettingrightitsflailing comingpanchayatelections.TheymaintainthatifKhan economy. Khan also signalledthathewaswillingtostart wassincere,heshouldhavegotthearmytoturnoffthetap a new innings with India.Justamonthintothejob,he onterroristattacksintherun-uptothetalks.Theybelieve was writing a letter to PrimeMinisterNarendraModiin Khan’seffortwasmoretoscorebrowniepointsinternation- which he said he was keentomoveforwardonresolving allyandeasethepressurePakistanfacesfrommajorpowers all outstanding issues, includingKashmir(Pakistan’score tocurbterrorism.IfthatwasIndia’sassessment,itshould concern), terrorism (India’sbiggestconcern)andtrade nothaveagreedtotalksinthefirstplaceandavoideddoing relations. He suggestedthatthe aflip-flopthatbeliesanyclaimof respective foreign ministersmeeton foresightorstrategy. the sidelines of the UN GeneralAs- Theoutcomeofthelatestslugfest sembly currently on in NewYorkto isthatIndiaandPakistanhave “explore the way forward”. nowboxedthemselvesintoaneven India cautiously acceptedtheoffer tightercornerthanbefore.Withboth but, within a day, reverseditsstand countriesadoptingevenmorerigid and said the talks were offbecauseof postures,therearehardlyanyrational “deeply disturbing developments”.The choicesleft.TheModigovernment Ministry of External Affairsspokes- shouldintrospectastowhy,despite person cited the “brutalkillings”of itsprofessedmuscularapproach,the India’s security personnelandthe politicalsituationinKashmirremains recent release of 20 postagestamps amess.Andwhyitisunabletodeter by Pakistan glorifying terroristswho Pakistanfromstirringuptroublein have targeted India as thereasons.He theValleyatwillorevenmanagerela- went on to state, with unusualharsh- tionswithiteffectively.Theonusis If India thought ness, that “the evil agendaofPakistan alsoonPakistan,particularlyitsarmy Imran’s ofer was stands exposed and the truefaceof chief.IfBajwaclaimsthatlikeKhan the new PM of PakistanImranKhan just an efort to hewantspeacebetweenthetwocoun- has been revealed to theworld”.Khan tries,thentheminimumrequirement score international then hit out at Modi, tweeting:“All istoensurehisarmyobservesthe brownie points, my life I have come acrosssmallmen ceasefireagreementontheLoCand occupying big offices whodonothave it shouldn’t have stemstheflowofinfiltratorsintothe the vision to see the largerpicture.” Valley.Thereisalwayshopeandscope agreed for talks in The Indian statementwasfound fornewbeginnings,butthekeyisto the irst place wanting on several counts.Theof- guardagainsttragicendings.■ (cid:3) Illustration by SIDDHANT JUMDE U P F R O N T BIG MERGER, AADHAAR TO STAY, SMALL GAINS WITH RIDERS PG 7 PG 8 THE CRIMINALS INSIDE THE TRUMP WE ELECT WHITE HOUSE PG9 PG 12 S) E G A M Y I T THE LAUNCH T E The PM issues health G N/ cards in Ranchi A H on Sept. 23, 2018 Z K A W R A P MODICARE MORE BUSINESS, LESS CARE By Sulakshana Nandi On Sunday, September 23, Prime Nadu, Maharashtra, Rajasthan and her pocket. Private hospitals have been Minister Narendra Modi laun- Karnataka, have been implemented found providing unnecessary and selec- ched the Pradhan Mantri Jan with annual covers ranging from tive profitable services. Arogya Yojana (PMJAY) insurance Rs 30,000 to Rs 3 lakh per family. The So, while their benefits are un- scheme aka ‘Modicare’. It was billed, PMJAY is designed on similar lines. certain, what are the costs of these with his characteristic grandiloquence, It is necessary to look at the evidence schemes? The experience of states like as the ‘world’s largest healthcare pro- from these schemes, which the govern- Kerala, Rajasthan and Chhattisgarh gramme’, a reform that will be ‘visible ment seems to have ignored. is that claims keep rising under these from space’. Fact is the government’s These schemes are meant to protect schemes, premiums shoot up and the National (Rural) Health Mission, people from incurring large expenses government ends up paying. In Chhat- launched in 2013, covers a much larger on hospitalisation. Studies of previous tisgarh, for instance, the premium has population than the 107 million fami- schemes show that patients have to pay increased from about Rs 300 to Rs lies or 500 million supposed beneficia- from their pockets even though hospi- 1,100 in six years. The state will need to ries of the PMJAY. tals are supposed to provide free servic- spend Rs 600 crore this year on insur- For more than a decade, schemes es. According to the 71st round National ance for a cover of just Rs 50,000. like the Rashtriya Swasthya Bima Sample Survey, an insured patient Claims money, it has been found, Yojana at the national level, and state going to a private hospital still ended goes mainly to private hospitals: schemes in Andhra Pradesh, Tamil up paying an average of Rs 18,000 from scheme data shows private hospitals 4 INDIA TODAY OCTOBER 8, 2018 UPFRONT INDEX ‘Modicare’: Boon or Illusion? receiving80percentofclaims money in Chhattisgarh, PM Modi launched what is being touted as the world’s largest over70percentinAndhraPradesh and Maharash- government healthcare scheme on September 23, a collaboration traandmorethan60percentin Tamil Nadu. These between the Centre and states to provide healthcare to over 500 hospitalsalsochargepatientson the sly. And in this million people. Critics describe it as a smokescreen that gives the schemeofthings,boththepublic and the government impression of universal coverage without making meaningful space losewhileprivatehospitalsprofit. in the budget for such a far-reaching scheme. Still, no one would ThePMJAYwilldamagepublic healthcare deny that Indian governments have thus far failed to make necessary delivery.Notonlywilllessmoney be now available investments in health. Maybe we should seek solace in the fact that the need for universal healthcare has been recognised even though tobuild/improvegovernmenthospitals, government much about the Pradhan Mantri Jan Arogya Yojana—and the measly doctorswillcontinuetorefertheir patients to private allocation to build primary care centres under the Ayushman hospitalsfora‘cut’. Bharatplan—remainsuncertain Indiashouldlearnfromdeveloping countries who 5 haveachieveduniversalhealthcare. Thailand is such an 107 ` example.TheThaihealthcaresystem is adapted from LAKH MILLION theUKmodelbuttweakedtosuit their context. It is Annual coverage builtonastrongpublichealthsystem for primary and Families in 445 to be provided to districts across 26 secondaryhealthcare.Morethan 75 per cent of hospi- each beneficiary, states identified as talisationisingovernmentfacilities. Private hospitals including recipients of the reimbursements areusedjudiciouslyforhigh-end tertiary care. Instead PMJAY scheme, for hospital and based on the 2011 ofinsurance,theyhaveinnovative public financing, drug charges Socio-Economic whichisresponsivetotheneeds of different populations 2 days before Caste Census. andareas.TheThaigovernment spends 3 per cent of its Over 500 million and during hospitalisation, GDP on health; India, individuals and 15 days after expected to benefit by comparison, spends The PMJAY just over 1 per cent. 1,200 will damage The upgradation of ` 2,000 ` public 150,000 Health Sub- Centres and PHCs as healthcare CRORE ‘Health and Wellness CRORE delivery. It to build Centres’ (HWCs) under mimics the US 150,000 primary Allocated in 2018-19 Ayushman Bharat is an healthcare centres budget for PMJAY; health system, opportunity for better under Ayushman Rs 10,000 crore which is costly Bharat, or just earmarked over primary healthcare. Rs 80,000 per centre the next 2 years with poor But it needs more than outcomes the measly Rs 1,200 14,935 crore budgeted within ` the limited National Health Mission funds. It needs closer to Rs 2.5 lakh Average cost of hospitalisation in rural India and Rs 24,436 in urban crore at Rs 17 lakh per HWC. The Community Health areas in 2014, says National Sample Survey Office Centres and District Hospitals can be strengthened too. Our approach to human resources for health needs to 60% 1,354 change: more local youth need to be trained as health- care providers to serve in their districts. A few private hospitals could be empanelled for limited high-end Of PMJAY costs to be borne Packages in PMJAY for some 20 services through referrals from district hospitals. by the Centre, 40% by states. specialised surgeries, including 5 states and Union territories The PMJAY mimics the US health system, which coronary bypasses and knee —Kerala, Punjab, Odisha, is expensive with poor outcomes; the Thai model replacements, at rates 15-20% Telangana, Delhi—opt out, saying lower than under another would have served India better. Far from being the their existing schemes central government scheme panacea for India’s healthcare ills, the PMJAY is likely are better to exacerbate them and be an even bigger disaster 1% 1.6 than the previous health insurance schemes. ■ MILLION Sulakshana Nandi is a public health researcher and Of Rs 5 lakh annual allocation People die in India every year National Co-convenor of the Jan Swasthya Abhiyan spent by each recipient, say because of poor healthcare. (People’s Health Movement India) critics, would cost Rs 50,000 The worldwide total is 5 crore. While Rs 10,000 crore million, estimates a new study translates to Rs 1,000 per published in the Lancet family; or Rs 200 per person this month 16 (cid:3)INDIA TODAY OCTOBER 8, 2018 14.8 LAKH CRORE Total business of the entity formed by the merger of Bank of Baroda, Vijaya Bank and Dena Bank BANKING only sweep the muck under the car- pet. Former RBI governor Raghuram BIG MERGER, Rajan said in September last year that public sector bank mergers should be SMALL GAINS done only after the balance sheets have been cleaned up. “I would say restore the banks to health, get an active board composed of professionals. There has F inanceministerArunJaitley banks.Althoughthe combined numbers been a steady attempt to professionalise believes the merger of three look impressive, they do precious little banks and remove political hacks. Once public sector banks—Bank of to improve the overall performance of we have done that, I think there will be Baroda, Vijaya Bank and Dena Bank— these banks. “The banks will continue an ideal situation for merger,” he said. will create a strong entity and boost the to be under government ownership and The All India Bank Employees’ As- weakest among them (Dena Bank), but become channels to roll out government sociation has said there is no evidence not everyone is convinced. According schemes. There will be no change in the that mergers strengthen banks or bring to him, the government did not favour way they function,” says Madan Sabna- efficiency. Some argue that the merger a merger of weak banks, and so came vis, chief economist with Care Ratings. will reduce the capital burden for the up with the idea of merging two strong “In the end, what we have is a horizontal government over the long term and en- banks with a weak one to create India’s summation of balance sheets. That is a able better management of a smaller set third largest bank with a total business very short-term solution to addressing of large nationalised banks. of Rs 14.82 lakh crore. the problems of state-owned banks.” With fewer such banks, capital Dena Bank is one of the 11 public Although Dena Bank has a net NPA allocation, performance milestones sector banks put under the Prompt ratio of over 11 per cent, the combined and monitoring will become easier. Corrective Action (PCA) framework of net NPA ratio would be at 5.71 per cent, Krishnan Sitaraman, senior director, the Reserve Bank of India (RBI). Banks making it look healthier. Crisil Ratings, says: “Such consolida- are put under PCA when they breach There are no larger benefits of tion will engender economies of scale key regulatory requirements relating synergies being discussed nor any clear and can structurally improve operating to capital adequacy ratio (a measure of plans to cut costs highlighted. Instead, efficiencies and governance. It will also a bank’s available capital expressed as the government has assured bank em- help the merged entity to participate in a percentage of its credit exposures), ployees of no job cuts post-merger. The credit growth opportunities and defend return on assets and non-performing merger comes at a time when public turf.” In the past five years, public sec- assets (NPAs). Banks under PCA are sector banks are straddled with bad tor banks have ceded around 10 per restricted from issuing fresh loans, loans to the tune of around Rs 9 lakh cent market share of banking assets to expanding branches or recruiting crore as on March 2018. private banks, and could lose another more staff. In April last year, five of the The Narendra Modi government 10 per cent over the next three years if State Bank of India’s subsidiaries were has been advocating consolidation of capital constraints continue, adds Sita- merged into the parent bank. the public sector banking space. While raman. Arresting this would be crucial, The concern for some experts is experts have long mooted the concept of but the big question is whether such that the present merger changes noth- fewer, larger banks, some have warned mergers alone will help. ■ ing—capital, net worth or assets of the that mergers for the sake of size will —M.G. Arun Illustrations by TANMOY CHAKRABORTY OCTOBER 8, 2018 (cid:3)INDIA TODAY (cid:3)7

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