As it will be far reaching to expect a messiah politician to sacrifice his career in taking out the vicious cycle of defaults faced by our banks, ‘slow’ is the way to go
It does not take a genius to recognise that life is full of contradictions. It, also, does not take a genius to recognise that everything changes. The Government of India is trying seriously to grapple with these contradictions. Whether it sees the points of contradiction is anybody's guess. In conversation with a cabinet Minister with a significant portfolio at the Central level I heard him rue; “I am terribly worried, the jobs in my sector are simply not growing. The forecast are going wrong and I will have to face my constituents with these issues not far from now.” I almost suggested, then, slow down on digitisation, automation and robotics, till the new job opportunities that these interventions create, are in place.
I desisted from this temptation because I know that the powerful get uncomfortable with suggestions which seem to be out of sync with their thinking. No one influential in the hierarchies of Union Government is willing to talk in a tune, other than one of ‘acceleration’, whenever it comes to digitisation, automation and more. The risk of swimming against the stream appears to them as far too risky. This is an understandable position because it is difficult not to sing and dance like the crowd, especially when the conductor of the orchestra or the cheerleader is the epitome of patronisation. let us look at the banking sector — some of its forecasts; some ground realities.
A major international banking group has forecast that one third of the jobs in the banking industry in India would be lost in the decade between 2015 and 2025.The future of banking growth would be in advocacy and spreading financial literacy. It would be in promoting financial products and spreading the meaning and tools of investment.
The consultative role of the banking profession would go up. The traditional banker's job of passbook updating, cash deposit, verification of Know Your Customer's are facing redundancies. The coming in of digitisation, automation, robotics has a simple social lesson; even the salary uploading will be automatic. There will be no one to one correlation between number of transactions and people needed to handle them. The low end jobs have taken a big hit.
The coming in of technology requires a significant investment. The banks are replete with impaired assets. The balance sheets are smudgy and the clamour is again for recapitalisation. Nobody is willing to look at the ‘hole at the bottom of the sea’ — as it were.
If the answer was in converting loans into equity and bifurcating stressed account debt into sustainable and unsustainable portions, then it would have happened long ago. It may be worth recalling that similar attempt was made, at institutional level, in the case of Unit Trust of India (UTI) some decades ago. It met with limited success. The institutions had been drained by a few to-be-rich and powerful. With no unique tracks available, no punitive action was possible in the real world. Any attempt to get to the bottom, would probably have spilled too many beans, for too many people with political clout. The rest is history.
There is, as the writer of these lines has stated at the beginning of the text, again, a contradiction to be resolved. It is not the common man who drains the bank it is those who have an octopus grip over parts of the banking system and the governance process. It needs a determined person willing to risk crucifying his political future to take the bull headlong. In Indian mythology this might well be Parshuram ki Pratiksha (The waiting for Parshuram).
Since such a possibility looks remote, it would be just as well to recognise that, in spite of a well-meaning orchestra for automation, it will happen only with a sense of gradualism and realism. Alternate jobs would have to be created and skill formation for them will require large scale pre-programmed re-deployment.
Anything else is serenading a powerful slogan with little content and the possibility of a huge disenchantment.
Should that happen it will do no good to anyone and least of all the present political and bureaucratic institutions and the newly entrenched interest.
(The writer is senior managing director and principal economic advisor, Protiviti India Member Pvt ltd)