Number Games

There is a saying that if you start torturing numbers, they will do any thing as per your wishes.There are many experts in India who can always play with numbers, specially in financial analysis. Let us start with recent PNB/Nirav Modi scam, what does the number say Rs 12,646 Cr, this is the loan amount that the rich jeweller has defaulted. This number looks quite big in isolation, a common man even can not think about this amount and forget having this type of amount in his control, so for him this figure is too  big. Let us now see how the financial expert will project this figure- first the expert will find out what is the total amount of  bad loans of this bank, in this case the bad loans and non performing assets of PNB are approx Rs 57,520 Cr, so now the total figure of bad loans will  Rs 8o,166 Cr, this means that Nirav Modi’s bad loan figure contributes almost 22% of bad loans. This figure of 22% also looks very much on higher side.

Now look this figure of Nirav Modi’s default from other angle, before this happened the average  size of fraud in PNB, when the borrower willfully defaulted was only Rs 9.6 Cr between 2012-2017, now comparison will be very bad to project, as Nirav Modi’s default figure is almost 5522 times of average figure, so this type  of analysis no financial expert will like to project.

So what will they do to show that this figure of default looks very small. In this case if you can find out what are the bad loans/NPA of  banks (Public Sector, Private & Foreign Banks in India), presently this figure is about Rs 900,000 Cr. Now if you  compare this figure with Nirav Modi’s default amount of Rs 12,646 Cr, the default of Nirav Modi looks very small, which works out to be just 1.4% of  total default amounts of all banks.

In the times of UPA govt this type of  figures were working  every time, when the scams used to happen, the govt official always used to give some notional percentage figures to silence the critics. You all have seen scams running into lakhs of Cr Rupees. UPA govt knew Vijay Mallaya will default on his loan of almost Rs 8000 Cr, but did nothing, and same thing was going on with Nirav Modi, can any one believe that without the involvement of some big person from the govt this could have happen. In this case NDA govt did not relied on the camouflaged figures and asked every bank to give the revised and true figures of bad loans and NPA and that was the time when bank could not hide or camouflaged this figure of default.

Continuing with number games, I will add one more incident when numbers were projected in such a way , so that country’s image could be boosted. In 2012, you all will recall, Nirbhaya incident happened in National Capital Region. There was one news report which suggested that Sweden had one of the highest incidents of the rapes in the world and the situation in our country is much better. It mentioned that in Sweden for every 100,000 inhabitants 60 cases of rapes are reported every year, whereas in India there are only 2 cases of rapes are reported every year. But the report never mentioned that in our country over 95% of rapes are never reported because the system stigmatises the victims who come forward, but sometimes the system may protect the rapists because of his political connection. The classical case happened recently in UP, where the rapist who happened to be a brother of MLA was protected by police and in the process police arrested victims father and beat him to death in a lock up. After much hue and cry, the culprit was arrested.

The main and wider point here is that before believing in number, it is important to look at the whole picture, context is the most important factor when trying to make sense of a number. When somebody makes an effort to persuade you that this number is significant, the first thing one must do is to translate it into more revealing data or truth that incorporates relevant  link and context.

So what you say my friends.

Awaiting for your views/comments/feed backs.