Recently published data on financial flows to the commercial sector confirms why growth sank to the depths it did last year—financing from all segments saw a breath-taking slide that is unprecedented!
In its urgency to bring in foreign investments to encourage future growth and employment, govt must remember that timing is as critical as the content of reforms
The government must work on a credible fiscal consolidation strategy once crisis settles. For now, fiscal support must be spent such that it can be credibly redeemed
Fiscal risks intensifying from build-up of liabilities. It would be prudent to fund targeted hand-outs to corona-affected segments by redirecting subsidy spends
Budget 2020-21: For now, the government has managed to ‘escape’; it anticipates that structural reforms will revive growth, and investments, with help from monetary easing, and a possible pick up of global growth
India’s past does not inspire confidence. If the TOT model fails and insolvency creeps into NHAI, pfc, etc, India could be staring at a low-level growth trap.
The Reserve Bank of India reported, recently, that credit quality deteriorated in June 2019, with rise in stressed and NPA ratios in all sectors except industry (Monetary Policy Report, October).
A great deal will depend on how the MPC chooses to communicate its views on growth, and the role of monetary policy to undertake the ‘heavy-lifting’, post-fiscal shock