April 25, 2018, 9:44 pm IST
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Economy will be back from glitches

Economy will be back from glitches

 Apr 01, 2018

The former RBI Governor, Raghuram Rajan, was among the first to stress the need for banking reforms, with nationalized banks running into heavy debts. He did not advocate privatization, but stressed on more professionalism. Then it was taken up by other economists like Dr Bibek Debroy and Dr. Surjit Bhalla. Typical of economists no two of them seem to agree. Now it is the turn of Dr. Arvind Subramaniam, the Chief Economic Advisor, to chip in with his bit.

Unlike other experts he is optimistic and the recent turbulences over demonetization and GST, he dismisses as short-term consequences. According to him the economy is on an upward trajectory. But he cautioned that policymakers have to evaluate whether more has to be done to deal with the banking sector woes.

''After we put behind some of the major structural reforms, growth has started to revive… In some way there are two or three big reform actions that don’t necessarily involve new stuff that we have to do,' he said while referring to the GST implementation and Air India privatisation.

He said banks were saddled with Rs.10 lakh crore of bad loans which the policymakers were trying to resolve through insolvency and bankruptcy codes and other steps. 'If we can solve this twin balance sheet challenge given the new developments and if we put the short term consequences of GST and demonetisation behind us, I think that could itself propel us to higher rates of growth than we have seen recently.' This he said at the recent the India Economic Conclave.

The economy is estimated to grow at 6.6 per cent in the current fiscal, lower than 7.1 per cent recorded in 2016-17. For 2018-19 fiscal beginning April 1, he has projected the growth to be between 7 to 7.5 per cent.

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