21.8        ndian    onom
     possible. And that is precisely what the creation of           It could solve the coordination problem since
     PARA would aim to do.                                          debts would be centralised in one agency;
     Capital requirements: It would require large                   It could be set up with proper incentives by
     capital, which may be managed in the following                 giving it an explicit mandate to maximise
     way:                                                           recoveries within a defined time;
              First and the most important source of it             It would separate the loan resolution
              would be the government (through issues               process from concerns about bank capital.
              of securities);                             By mid-2017, the Government had hinted at
              Second source could be capital markets      taking some actions in this regard, however, the
              (if shares in the PSBs are sold or private  Union Budget 2018-19 remained almost silent on
              sector buys stakes in the PARA);            the issue. Meanwhile, the recapitalisation process
                                                          of the public sector banks got a big boost when
              Third source of capital could be the RBI
                                                          the Government announced ( in October, 2017)
              (the central bank may transfer some
                                                          a sum of Rs. 2.11 lakh crores for the purpose. This
              government securities it is holding to
                                                          way, one half of the TBS crises looks under the
              PSBs and PARA—this will decrease
                                                          Government’s policy priority.
              RBI’s capital, the capital of the PSBs and
              PARA would increase. It would create no
                                                             4. UNiverSAl heAlThcAre
              implications for monetary policy since no
              new money would be created).
     Risks and difficulties: Creating the PARA is
                                                          It was the 12th Plan, the first official document,
     not without its own difficulties and risks; the
                                                          which advised in favour of the universal healthcare,
     country’s history is not favourable to public sector
                                                          estimating a total allocation of around 2.5 per cent
     endeavours. Yet, one must ask how long India
                                                          of the GDP. The idea could not be implemented
     should continue with the current decentralised
                                                          as the Government of the time could not commit
     approach, which has still not produced the           itself to the required funds (estimated to allocate
     desired results eight years after the GFC, even      maximum 1.6 per cent of the GDP). At present,
     as East Asian countries were able to resolve their   the total government expenditure (centre plus
     much larger TBS problems within two years.           states) on healthcare is 1.4 per cent of the GDP
     One reason, of course, was that the East Asian       (Economic Survey 2016-17). The healthcare related
     countries were under much more pressure that         sufferings in the country have been always a matter
     they were in crisis, whereas India has continued     of high concern—out of pocket expenditure being
     to grow rapidly. But an important reason was         one of the highest in the world (at over 70 per
     that it deployed a ‘centralised strategy’, which     cent since many decades). The idea has been a
     allowed debt problems to be worked out quickly       major issue of the public debate. During the last
     using public asset rehabilitation companies. In      General Elections, the idea kept resonating across
     sum, current efforts have not been successful in     the promises of the political parties.
     addressing the TBS problem. New solutions must
     be tried. Perhaps it is time for India to consider   the chAllenges
     the PARA as one such solution.                       Committing to the cause of universal healthcare
          The approach of PARA could eliminate most       at the practical level has been a daunting task for
     of the obstacles currently plaguing loan resolution: the Government, given the scarcity of resources.