The Centre and the Reserve Bank of India (RBI) are working together to ensure bad debts do not become a ‘time-bomb’ and impact the economy, according to the Chief Economic Advisor.
“It can’t be a time bomb,” said Arvind Subramanian on Wednesday drawing a parallel with China. Corporate loan exposure of banks in China corresponds to 165 per cent of that country’s GDP. In contrast, the exposure at Indian banks to such loans works out to 35 per cent of the GDP. “Various steps are being taken,” he said, without elaborating. Mr. Subramanian was speaking to the media at the C.R. Rao Advanced Institute of Mathematics, Statistics and Computer Science here. On consolidation of public sector banks, he said the aim was to increase the efficiency and get fewer but more efficient banks.
Brexit ‘ripples’Describing the referendum in which Britain voted to exit the European Union (EU) as a landmark development that might slow down the global economy, he said: “We are really well cushioned to bear the impact.”
India remains a safe haven for investments, he said.
The Centre would be carefully watching the Brexit impact on growth in the U.S. and Europe, and resultant implications for Indian exports.
However, given the offset that a good monsoon would provide, he said the Centre would stick to the growth forecast made in the Economic Survey. The current account deficit will be within one per cent of GDP helped by low crude oil prices, Mr. Subramanian said.
A good monsoon would also help cool prices of pulses, currently contributing to much of the food inflation.
