Mumbai: Prime Minister Narendra Modi, in an interview to the Times of India on August 12, 2018, answered questions on a range of issues.
We fact-checked 10 of his claims: On shell companies, amount realised through disinvestment of public sector enterprises, non-performing assets, credit growth of scheduled commercial banks, creation of jobs based on Employees’ Provident Fund Organisation data, startups, Micro Units Development and Refinance Agency (MUDRA) loans, growth of tourism sector with increase in foreign tourist arrivals, increase in mobile manufacturing units and registration of students under Study Webs of Active Learning for Young Aspiring Minds or SWAYAM, government’s online educational portal. Of these, seven claims were true and two partially true and one unclear.
Claim 1: “As part of our mission against black money and corruption, my government has struck off the names of around 2.6 lakh shell companies and 3.09 lakh directors. Names of 55,000 companies more will be struck off this month.”
Fact: Partially True, about 226,000 companies were struck of in the last fiscal year (2017-18) and 225,000 companies have already been struck off earlier, ministry of corporate affairs newsletter for July 2018 states.
As many as 497,742 companies were struck off and 38,858 companies were in the process of being struck off, as on June 30, 2018.
Of the 297,000 (2.97 lakh) companies identified for not filing financial statements for consecutively two years or more, 226,166 shell companies were struck off in 2017-18, P. P. Chaudhary minister of state for law and justice and corporate affairs told the Lok Sabha (Parliament’s lower house) on July 27, 2018.
In a previous reply to the parliament on January 5, 2018, the minister had informed that above mentioned companies were struck off as on December 19, 2017.
Source: Rajya Sabha
The government said 309,619 directors/promoters were disqualified under the Companies Act, 2013, for not filing financial statements/annual returns for a continuous period of three financial years ending 2015-16.
Of the 309,619 directors disqualified, 68% or 210,116 directors were on the board of the companies that were struck off. The “disqualified directors/promoters are debarred for a period of 5 years to be appointed or re-appointed as a Director”, Chaudhary said.
“Shell companies are treated as those companies who have not filed their statements of accounts for last 2-4 years before the registrar of companies (ROC),” Shahid Khan retired Indian Revenue Service officer and former member of the Central Board of Direct Taxes, told FactChecker.
“As a matter of experience, shell companies actually take extra care to file their accounts and compliances in order to prove their genuineness,” Khan said. “In reality, what happens is that many companies that close their business for one reason or the other stop filing their annual accounts with RoC, as the winding up process is cumbersome and expensive. Most of the companies that have been struck of from the RoC records are such companies. To determine if a company is a shell company is a lengthy process, and cannot be decided on the basis of mere non-filing of their statement of accounts.”
Claim 2: “Since 2014, government has realised over Rs 2 lakh crore from disinvestment of [public sector enterprises] PSEs. In 2017-18, government realised a record Rs 1 lakh crore. This can be compared to the performance of the preceding 10 years (2004-05 to 2013-14) during which the cumulative collection was Rs 1.08 lakh crore. Comparatively speaking, we have realised double the amount that too in less than half the period.”
Fact: True, Rs 196,369 crore has been realised from disinvestment of PSEs between 2014-15 and 2017-18, according to data from Department of Investment and Public Asset Management under the Ministry of Finance. Rs 100,057 crore was realised by the government in 2017-18.
The government realised Rs 107,062 crore from disinvestment of PSEs between 2004-05 and 2013-14, data show.
Note: In 2006-07 and 2008-09, there were no proceeds accrued from disinvestment.
Claim 3: “Many stressed loans were reclassified as NPAs. As a result of the 2015 AQR, gross NPAs of PSBs increased by nearly Rs 6.17 lakh crore. Significant provisioning (~Rs. 5.12 lakh cr) was carried out by PSBs for transparent recognition….Cases of 39 large defaulters, with NPAs amounting to about Rs. 2.69 lakh crore exposure, have been filed before the National Company Law Tribunal (NCLT)….To strengthen PSBs, government has, after initial infusion of Rs 70,000 crore under Indradhanush plan, again announced recapitalisation of Rs 2.11 lakh crore in October 2017.”
Fact: True, non-performing assets increased by Rs 616,586 crore between March 2015 and March 2018 (provisional data), Shiv Pratap Shukla, minister of state in the ministry of finance, told the Lok Sabha on July 20, 2018.
As many as 39 large defaulters have not repaid Rs 2.69 lakh crore and cases against them have been filed under the Insolvency and Bankruptcy Code, 2016, before the National Company Law Tribunal, as of December 2017, Shukla told the Rajya Sabha (Parliament’s upper house) in a reply on August 7, 2018.
The government announced recapitalisation of Rs 2.11 lakh crore in October 2017, after the initial announcement Rs 70,000 crore under the Indradhanush Plan–for revamping public sector banks–in August 2015.
Claim 4: “Scheduled Commercial Banks (SCBs) have shown a credit growth of 12.4% year-on-year (as on July 20, 2018), which coupled with a strong deposit base of Rs. 114.38 lakh crore reflects customer confidence and a strong fund base.”
Fact: True, SCBs reported aggregate deposits of Rs 114.38 lakh crore, as on July 20, 2018, Shiv Pratap Shukla, the minister of state in the ministry of finance, told the Rajya Sabha on August 7, 2018. This was “32.8% more than their aggregate credit, reflecting customer confidence and a strong fund base”, he said.
The SCBs have shown credit growth of 12.4% year-on-year, as on July 20, 2018, “which will help further improve net interest margin from the existing healthy level of 2.7% as of March 2018”, Shukla said.
Claim 5: “If we look at [Employees’ Provident Fund Organisation] EPFO data, more than 45 lakh formal jobs were created between September 2017 to April 2018. According to our study based on EPFO data, more than 70 lakh jobs were created in the formal sector alone last year.”
Fact: Partially True, 3.7 million new EPFO payroll records were reported between September 2017 and April 2018, according to Employees’ Provident Fund Organisation data released by Ministry of Statistics and Programme Implementation on July 25, 2018, the latest data available when the interview was published.
The EPFO data between September 2017 and May 2018 shows about 4.5 million registered payroll records, between September 2017 and April 2018, the Prime Minister claimed.
While, the recently published data on August 20, 2018 indicates that the revised EPFO payroll records are down by 12% to 3.28 million for the same period from 3.7 million as per the July 2018 release.
“Data is provisional as updation of employees records is a continuous process and gets updated in subsequent month/s,” the note in the EPFO release said.
|Payroll Data September 2017 To May 2018|
|Month/Age Band||Less than 18||18-21||22-25||26-28||29-35||More than 35||Total|
Source: Ministry of Statistics and Programme Implementation; Data released on July 25, 2018
Note (Employees’ Provident Fund Organisation): Data is provisional as updation of employees records is a continuous process and gets updated in subsequent month/s; This is age-band wise data of all non-zero contributors that are registered under EPFO during particular month; For each age-wise band, the estimates are net of the members enrolled and ceased during the month as per records of the EPFO; The estimates may include temporary employees whose contributions may not be continuous for the entire year; Members’ data above are linked to unique Aadhaar Identity; EPFO manages social security funds of workers in the organised/semi organised sector in India; EPFO has more than 6 crore active members (with atleast one month contribution during the year); Establishments which remit their first ECR (Electronic Challan cum Return) in that particular month.
“The EPFO is releasing enrolment numbers on a net basis, so it might be the case that companies are reporting leaving of employees with a lag, while the joining of employees is being reported immediately,” Soumya Kanti Ghosh, group chief economic advisor, State Bank of India, and co-author of Towards a Payroll Reporting in India, said on the decline in records, the Indian Express reported on July 21, 2018. “Additionally, given that retirees are also netted out, this may imply a downward bias to net EPFO numbers as retirees mean a new vacancy and hence a new hire.”
The Prime Minister claimed that 7 million jobs were created in the formal sector last year, based on the above mentioned payroll report, the data of which was contested, FactChecker reported on January 29, 2018.
Payroll data are “definitely a way to calculate jobs”, Madan Sabnavis, chief economist at CARE Ratings, a credit rating agency, told FactChecker. “There would be some first timers which is new jobs. Also after [Goods and Services Tax] GST, more [small and medium-sized enterprises] SMEs have gotten registered and their employees enrolled. That could count as enrolments though may not be new jobs. There could be shifts from private [provident funds] PFs to EPFO. But in the next year or so, EPFO would be a fair measure for reckoning employment.”
“Again one must remember that jobs are created regularly in the normal course of economic activity,” Sabnavis added.
“EPFO data is a very complicated piece of work,” Abhijit Sen, former member of the Planning Commission, said, The Hindu reported on August 24, 2018. “There is a lack of clarity about the methodology being followed for this dataset. “It is not clear what happens when a person changes jobs — and that happens very, very frequently. “When someone applies for a new policy and already has an older one, what does EPFO do? Does it merge the two policies? Does it delete one? Does it keep the older policy active? EPFO is not actually telling us… What should happen is that they must make a deduction somewhere, but it is not clear if this is happening,” Sen added.
Claim 6: “There are more than 15,000 startups, which government has helped in some way or the other. We all know they are job multipliers.
However, it is unclear if 15,000 startups mentioned by the Prime Minister are under Startup India initiative or include others.
As on July 15, 2018, of 16,324 applications received, 11,129 were recognised as startups, C.R Chaudhary, minister of state for commerce, told the Lok Sabha on July 23, 2018.
Claim 7: “More than 12 crore loans have been given under [Micro Units Development and Refinance Agency] MUDRA Scheme.”
More than 134 million MUDRA loans have been given as on August 3, 2018, government told the parliament on August 10, 2018.
Of the 134 million loans given, 91% or 122 million loans are given under the Shishu scheme (loans upto Rs 50,000), 8% or 10 million under Kishore (Rs 50,000 to Rs 5 lakh) and 1% or 1.9 million under Tarun scheme (above Rs 5 lakh and below Rs 10 lakh).
“Such amounts of micro loan may be useful for someone like a single-cattle dairy farmer or some ‘thailawala’ but it will not be sufficient to create substantial employment,” Ajit Ranade, chief Economist, Aditya Birla Group, was quoted as saying in India Today on August 13, 2018.
“Such loans will create jobs,” Sabnavis said, asked if these loans hold the potential to be job multipliers.
“Care however must be taken in interpreting this data, as these kinds of loans may have been going under a different heading earlier and hence would have happened under another umbrella. MUDRA loans are the same loans given by banks under priority sector to SMEs which get bracketed under this scheme. MUDRA loans are given by the same banks from their funds and are hence not new loans being given by any other institution,” Sabnavis said.
Claim 8: “The country’s tourism sector has been growing rapidly with foreign tourist arrivals in India in 2017 registering a grow of 14% over 2016. We all know tourism provides maximum employment, both direct and indirect.”
Fact: True, foreign-tourist arrivals in India increased 14%, from 8.8 million in 2016 to 10 million in 2017, K.J Alphons, minister of state for tourism (independent charge), told the Lok Sabha on August 6, 2018.
The tourism sector has created 14.62 million job opportunities over the last four years, Alphons told the media in Delhi in July 2018, the Press Information Bureau reported on July 17, 2018. “Tourism sector provides opportunities to skilled as well as unskilled job seekers thereby providing employment to all sections of the society,” he said.
Claim 9: “The number of mobile manufacturing units in this country has gone from a handful when my government took over, to close to 120. These alone have generated 4.5 lakh direct and indirect jobs.”
Fact: True, mobile manufacturing units in the country increased from three in 2014 to 127 in 2018, Ravi Shankar Prasad, minister of electronics and information technology, told the Lok Sabha on August 10, 2018.
About 210,000 people were employed directly in these mobile manufacturing units, which generate 400,000 indirect jobs, Prasad said.
Claim 10: “We allowed the best lecturers to teach to a large number of students using the SWAYAM portal, on which there are more than 20 lakh students registered. We started 32 educational channels that take quality education to every nook and corner of the country.”
Fact: True, about 3.4 million students have enrolled in over 800 courses delivered of more than 1,550 open online courses listed on the Study Webs of Active Learning for Young Aspiring Minds–known by its acronym SWAYAM–website, Satya Pal Singh, minister of state for human resource development, told the Rajya Sabha on August 9, 2018.
The government started 32 direct-to-home channels under SWAYAM Prabha, which transmits educational content 24X7, government told the Lok Sabha on February 5, 2018.