Thoughts on economics and liberty

The horrible cost of the Mudra program for India’s future

Mudra is public sector bank micro-lending, a continuation of the failed IRDP type programs of the past. These programs were not only terrible for taxpayers since the loans were not repaid and banks had to be recapitalised, but the schemes were a major means of corruption at all levels of government and public sector banks.

Mudra’s average disbursement is Rs.45k of which I’d say that only Rs.20k reaches the actual “beneficiary”, on average. The impact of Mudra on the pubic sector banking system is going to be as disastrous as was the case with previous schemes: leading to deficit financing, money printing, inflation.

The only reason government doesn’t want to sell of public sector banks is that it won’t be able to use this hugely corrupt mechanism to cheat the taxpayers.

Private banking would restrict loans to healthy businesses, which will grow well and give real, sustainable jobs. The public sector banking model is a total disaster for India but don’t expect any party to privatise them anytime soon.


Narendra Modis MUDRA Yojana spells trouble for banks; bad loans jump 53%

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Sanjeev Sabhlok

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