By Rohit and Jhalak Some Rajya Sabha seats will be contested over the next year. The Presidential elections are also scheduled to be held in 2012. The recent assembly elections has implications for both these elections. The Presidential elections will depend on the strenght in the assemblies, in Lok Sabha and in Rajya Sabha (which could change over the next year). Implications for Rajya Sabha Elections The composition of Rajya Sabha may undergo some changes. A total of 12 Rajya Sabha seats are up for election in 2011. This includes 6 seats from West Bengal, 3 from Gujarat and 1 each from Maharashtra, Tamil Nadu and Goa. Another 65 seats, across 18 states, go for elections in early 2012. The largest chunk of these seats comes from UP(10), followed by Andhra Pradesh(6), Bihar(6) and Maharashtra(6). Since Rajya Sabha members are elected by the elected members of the Legislative Assembly of the State, a change in the composition of the assembly can affect the election outcome. We used the current assembly compositions to work out scenarios for Rajya Sabha in 2011 and 2012. There could be alliances between parties for the Rajya Sabha elections, so we have estimated a range for each grouping (Scenario I and II) for 2012. See Notes [1] and [2].
| Parties/ Coalitions | 2010 | Scenario 2011 | Scenario 2012 | |
| I | II | |||
| UPA | 89 | 94 | 95 | 97 |
| NDA | 65 | 65 | 67 | 66 |
| Left | 22 | 19 | 14 | 14 |
| BSP | 18 | 18 | 19 | 19 |
| SP | 5 | 5 | 6 | 6 |
| AIADMK | 4 | 5 | 5 | 5 |
| BJD | 6 | 6 | 5 | 5 |
| Other parties | 18 | 18 | 20 | 19 |
| Independent | 6 | 6 | 5 | 5 |
| Nominated | 8 | 9 | 9 | 9 |
| Total | 241 | 245 | 245 | 245 |
Implications for the election of the President The President is elected in accordance with the provisions of Article 54 and 55 of the Constitution. The electorate consists of the elected members of Lok Sabha, Rajya Sabha and all Legislative Assemblies. Each MP/ MLA's vote has a pre-determined value based on the population they represent. The election is held in accordance with the system of proportional representation by means of a single transferable vote. The winning candidate must secure at least 50% of the total value of votes polled. (For details, refer to this Election Commission document). There is no change in the Lok Sabha composition (unless there are bye-elections). Position in Legislative Assemblies After the recent round of assembly elections, the all-India MLA count adds up to:
| UPA | 1613 |
| NDA | 1106 |
| Left | 205 |
| BSP | 246 |
| AIADMK | 155 |
| BJD | 103 |
| SP | 95 |
| Others | 597 |
The above numbers can now be used to estimate the value of votes polled by each coalition. See Note [3]:
| Value of votes cast | Scenario - 1 | Scenario - 2 |
| UPA | 439,437 | 440,853 |
| NDA | 307,737 | 307,029 |
| Left | 51,646 | 51,646 |
| BSP | 77,243 | 77,243 |
| SP | 38,531 | 38,531 |
| AIADMK | 36,392 | 36,392 |
| BJD | 28,799 | 28,799 |
| Others | 119,097 | 118,389 |
| Total | 1,098,882 | 1,098,882 |
| Min. to be elected | 549,442 | 549,442 |
The UPA has the highest value of votes polled but the figure is not sufficient to get its candidate elected. Assuming that there are at most three candidates with significant support (UPA, NDA, and Left/Third Front), the winner will be the one who manages to bridge the gap with second preference votes. On this factor, the UPA backed candidate is likely to hold the edge over others. Notes: [1] At present, there are four vacant seats in Rajya Sabha (1 Maharashtra, 1 TN, 1 WB and 1 Nominated). It is assumed that all these seats are filled up in 2011. [2] Three of the 11 nominated members in the current Rajya Sabha have declared their party affiliation as INC. These have been included in the UPA count in the above analysis. For the sake of simplicity, it is assumed that members who get nominated in 2011/ 12 are not aligned to any party/ coalition. [3] The above analysis is based on the assumption that the next set of assembly elections happen after the Presidential election.
At noon today, the Finance Minister introduced a Bill in Parliament to address the issue of delayed debt recovery. The Bill amends four laws including the SARFAESI Act and the DRT Act, which are primarily used for recovery of outstanding loans. In this context, we examine the rise in NPAs in India and ways in which this may be dealt with.
I. An overview of Non-Performing Assets in India
Banks give loans and advances to borrowers which may be categorised as: (i) standard asset (any loan which has not defaulted in repayment) or (ii) non-performing asset (NPA), based on their performance. NPAs are loans and advances given by banks, on which the borrower has ceased to pay interest and principal repayments. 
In recent years, the gross NPAs of banks have increased from 2.3% of total loans in 2008 to 4.3% in 2015 (see Figure 1 alongside*). The increase in NPAs may be due to various reasons, including slow growth in domestic market and drop in prices of commodities in the global markets. In addition, exports of products such as steel, textiles, leather and gems have slowed down.[i] The increase in NPAs affects the credit market in the country. This is due to the impact that non-repayment of loans has on the cash flow of banks and the availability of funds with them.[ii] Additionally, a rising trend in NPAs may also make banks unwilling to lend. This could be because there are lesser chances of debt recovery due to prevailing market conditions.[iii] For example, banks may be unwilling to lend to the steel sector if companies in this sector are making losses and defaulting on current loans. There are various legislative mechanisms available with banks for debt recovery. These include: (i) Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act) and (ii) Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (SARFAESI Act). The Debt Recovery Tribunals established under DRT Act allow banks to recover outstanding loans. The SARFAESI Act allows a secured creditor to enforce his security interest without the intervention of courts or tribunals. In addition to these, there are voluntary mechanisms such as Corporate Debt Restructuring and Strategic Debt Restructuring, which These mechanisms allow banks to collectively restructure debt of borrowers (which includes changing repayment schedule of loans) and take over the management of a company.
II. Challenges and recommendations for reform
In recent years, several committees have given recommendations on NPAs. We discuss these below.
Action against defaulters: Wilful default refers to a situation where a borrower defaults on the repayment of a loan, despite having adequate resources. As of December 2015, the public sector banks had 7,686 wilful defaulters, which accounted for Rs 66,000 crore of outstanding loans.[iv] The Standing Committee of Finance, in February 2016, observed that 21% of the total NPAs of banks were from wilful defaulters. It recommended that the names of top 30 wilful defaulters of every bank be made public. It noted that making such information publicly available would act as a deterrent for others.
Asset Reconstruction Companies (ARCs): ARCs purchase stressed assets from banks, and try to recover them. The ARCs buy NPAs from banks at a discount and try to recover the money. The Standing Committee observed that the prolonged slowdown in the economy had made it difficult for ARCs to absorb NPAs. Therefore, it recommended that the RBI should allow banks to absorb their written-off assets in a staggered manner. This would help them in gradually restoring their balance sheets to normal health.
Improved recovery: The process of recovering outstanding loans is time consuming. This includes time taken to resolve insolvency, which is a situation where a borrower is unable to repay his outstanding debt. The inability to resolve insolvency is one of the factors that impacts NPAS, the credit market, and affects the flow of money in the country.[v] As of 2015, it took over four years to resolve insolvency in India. This was higher than other countries such as the UK (1 year) and USA (1.5 years). The Insolvency and Bankruptcy Code seeks to address this situation. The Code, which was passed by Lok Sabha on May 5, 2016, is currently pending in Rajya Sabha. It provides a 180-day period to resolve insolvency (which includes change in repayment schedule of loans to recover outstanding loans.) If insolvency is not resolved within this time period, the company will go in for liquidation of its assets, and the creditors will be repaid from these sale proceeds.
[i] ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf. [ii] Bankruptcy Law Reforms Committee, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. [iii] Volume 2, Economic Survey 2015-16, http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf. [iv] Starred Question No. 17, Rajya Sabha, Answered on April 26, Ministry of Finance. [v] Report of the Bankruptcy Law Reforms Committee, Ministry of Finance, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. *Source: ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf; PRS.
