This government deserves to be congratulated for certain achievements. In 2014, India was the world’s 10th-largest economy by GDP; today, it’s the sixth-largest. In four years, it has overtaken Russia, Italy, Brazil and, recently, France. By next year, India is likely to overtake Britain to become the world’s fifth-largest economy.

A lot of structural changes have been made and it is a work-in-progress. At the recent IPO analyst meet of HDFC AMC, Milind Barve pointed out the structural changes that have taken place in the method of savings by households. He pointed to the change in saving pattern over the past five years, from around 40 per cent in financial assets (60 per cent in physical assets) to around 50 per cent in financial assets now. Further, within the savings in financial assets, bank deposits, which accounted for 58 per cent of these, now account for 44 per cent. There is a shift towards investing in mutual funds, especially equity funds. There is thus, a case for continuing growth in mutual funds, especially equity funds, which underlies the continuing, domestic savings-propelled growth of our stock market.

It is this domestic-fuelled consumption and savings that is propelling the Indian economy to climb up the GDP ladder.

And herein lies the problem.

If it is the saver whose savings are propelling this growth, does he feel safe? His shift from physical savings (land, gold) to financial assets (equity, bonds, deposits) is premised on the belief that he will be protected.

He is not.

Consider bank deposits. The government had drafted the Financial Resolution and Deposit Insurance (FRDI) Bill in which it had empowered a ‘bail in’ of banks, wherein deposit holders would be forced to lose their savings, or part thereof. Bank deposits are insured only to the extent of only ₹1 lakh, a limit unchanged (unlike salaries of MPs, linked to inflation) since inception. Fortunately, the government has now dropped the FRDI.

Now consider road users. Are they protected? Just under 3,600 people died due to potholes in 2017. Why are roads bad? Does India have unique features that prevents good roads? No. It is only corruption and our policy of L1 (allotting the contract to the lowest bidder, thus guaranteeing shoddiness) that is responsible. It is those politicians and bureaucrats who allot work, even to those who have been declared as unfit, who are responsible for causing more deaths than terrorists. So, road users too, are not protected.

Who, then, is being protected?

LIC-IDBI fiasco

Savers also save for the future by buying insurance policies. They repose faith in LIC, which has served them well and has invested the funds wisely. But recently, under pressure from the government, it has agreed to buy stake in failed IDBI Bank, and, after SEBI (rightly) refused exemption to it from making an open offer, will end up with 51 per cent holding, spending a lot more to buy a bank that has a seemingly unsurmountable NPA problem. So, is LIC protecting its policy holders? Clearly, no.

So yes, we must celebrate our achievements, in growing the economy and our laudable efforts in many other fields. But, importantly, it is the responsibility of the government to protect its savers, and its consumers. It is not doing enough here.

(The writer is India Head — Finance Asia/Haymarket. The views are personal.)