Power sector NPAs: A crisis too near

The NPA crisis extends far beyond banks

The impact of non-performing assets (NPAs) of Indian banks extends far beyond the financial sector and poses a serious threat to our political economy and to society. Resources are indeed being channelled to address the issue, but our apparent inability to resolve the problem is a massive drag on the economy. The reasons appear to be inherent contradictions, poor understanding or incompetence, and piecemeal, not cohesive, decisions. The latest turn concerns the power producers’ petition for extending repayment deadlines.

Recall that NPAs rose from 2011 when they were 2.5 per cent of loans, because of overleveraging after a high growth period