The government sent a clear and unequivocal message that it would crack down on financial wrongdoing and be relentless in its pursuit, with the PM laying down the law. He was echoed by FM Arun Jaitley and cabinet colleague Piyush Goyal at the ET Global Business Summit.The warnings were sounded in the wake of alleged bank frauds involving jewellers Nirav Modi and Mehul Choksi and businessman Vikram Kothari and as the bankruptcy resolution process gets underway.“I want to make clear that the government will take stern action against irregularities related to economic matters,” Prime Minister Narendra Modi said on Friday. “The system will not accept the theft of public money. That is the key to New Economy, New Rules.”Jaitley warned that punishment would be heavy. “Those who deviate from that cause must always remember that the consequences will not only be a commercial and civil death as far as their businesses are concerned but the law would be tightened further if necessary to find out where they are and what is the extreme action the law permits against such persons.”Jaitley said Indian businesses needed to mend ways, such as the manner in which shell companies were created to launder money and avoid taxes.“If you claim to be the fastestgrowing economy and aspire to move into being a developed economy, where is the place for practices of this kind in the world of business?” he said.As for bad loans, wilful defaults exceed instances of genuine business failure.“Bank frauds that have come to the surface — if you periodically have incidents of this kind, the entire effort of ease of doing business goes into the background,” he said.“If fraud is taking place at multiple branches of a banking system and you don’t have a single employee who raises the red flag, does that not become worrisome?” Jaitley asked.He also questioned auditing systems and the effectiveness of supervision. “Regulators ultimately decide the rules of the game and have to have a third eye which is perpetually open and looking at the sector,” he said. “But unfortunately, in the Indian system, we politicians are accountable, regulators are not.”A sea change is taking place in the creditor-lender borrower relationship as the old belief that money one borrowed need not be returned has come to end, he said.A transparent and objective process has been worked out under quasi-judicial supervision through the Insolvency and Bankruptcy Code (IBC).PM Modi said when his government came to power in May 2014 crony capitalism had become entrenched. It had also inherited the twin-balance sheet problem — banks laden with bad debt and companies unable to repay loans. “We implemented a major reform, the Insolvency and Bankruptcy Code, to fix the situation,” the PM said.Jaitley said the government had sought to eliminate discretion in decision-making, one of the main sources of corruption. There are no controversies of resources and contracts being given out on the basis of discretion, he said.“Political corruption in New Delhi (has been) rapidly brought down if not disappearing,” he said, adding that a cleansing of political funding is going to be implemented through electoral bonds and other measures.‘INDISCRIMINATE LENDING’Goyal alleged that the previous government’s growth model was based on indiscriminate lending by banks, creating an artificial sense of rapid economic expansion. “It is something like the Kaun Banega Crorepati style of growth (Who Wants To Be A Millionaire?).In India, we paid better than that and said, ‘Who Wants to be A Billionaire?’ This is a process that is reflected in the huge amount of bank lending that this nation saw between 2004 and 2014,” the minister said.Bank credit tripled from about Rs 18 lakh crore to about Rs 53 lakh crore in 2004-2014 and the 10-year period saw GDP growth of 6.7%, he said. Goyal said this was based on indiscriminate bank lending without collateral or scrutiny.“Very often we are criticised that bank credit growth is low.But now as things are coming up, we realise this could be an alternative model of growth, which ultimately was to come home to roost,” Goyal said. “And as you try to clean up the mess, people of India would question what were the checks in the economic system.These things also brought the Indian infrastructure down.”With the government approaching its fourth anniversary and ahead of next year’s general election, Jaitley, Goyal and Union minister for water resources, river development and Ganga rejuvenation Nitin Gadkari also laid out the framework for New India as envisioned by the prime minister.In his address the previous day, Modi had charted India’s progress from being a member of the Fragile Five under the previous government to visions of a $5 trillion economy.‘AGENDA FOR THE FUTURE’“It’s been possible to blend political with economic reforms. It’s been possible to keep both the direction and the pace of economic reforms going,” Jaitley said, pointing to the direction that New India will take. “An agenda for the future has been laid down where Indian public opinion is not merely aspirational but also very impatient,” he said. “Therefore, all governments — Centre, states — future governments will all now have to act and deliver in accordance with that aspiration,” he said, laying down the big goal.Road transport, shipping, water resources and Ganga rejuvenation minister Gadkari flagged the need for a modern public transportation system in view of the alarming rise in private vehicles.He said the Ganga would be 80% clean by March 2019 and farm growth will get a big boost as 180,000 hectares of land is brought under irrigation.Jaitley said the government has established the objective of making India one of the better avenues for both domestic and foreign investment.“We have not only moved up (ease of doing business ranking) but also with the micro reforms, which are now in the process of being planned, I think over the next two to three years, from position number 142 to 100, I think the target of 50 is fairly achievable,” he said. It was time to stop speaking of government-led responsibility for ease of doing business, he said, asking industry to take over.He said the accelerated speed of infrastructure creation has to be maintained, flagging rail and urban revival for special attention going ahead.