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Last updated: 11 Jun, 2019  

India.Growth.9.Thmb.jpg Fixing the economy

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Bikky Khosla | 11 Jun, 2019

The last week saw some important developments which augur well for the economy. First, the government formed two new cabinet committees to check the declining trend in growth, generate employment, spur demand and push consumption. These are the major macroeconomic challenges facing the economy currently and the urgency the new government has shown to address them deserves praise.

Second, the Commerce Minister held a meeting on issues related to export credit with representatives of export organisations. The minister admitted that in the last few years the share of export credit has come down. More importantly, the minister revealed that he had asked the RBI to look into the possibility of providing $25 billion line of credit from its foreign currency reserves for swap to well performing banks, and to also look into priority sector lending norms for export credit.

Third, the RBI last week lowered the repo rate for commercial banks by 25 basis points to 5.75 percent, the lowest in the past nine years. This is the third reduction in repo rate this year. Besides, the apex bank changed the monetary policy stance from neutral to accommodative. This is a welcome step in the background of falling economic growth. Additionally, the RBI Governor assured that the central bank would make sure that transmission of reduced repo rate would be faster and higher.

Fourth, the apex bank also issued a new prudential framework for resolution of stressed assets, replacing its controversial 12 February 2018 circular. There are three major changes: it is now made voluntary for lenders to take defaulters to the bankruptcy court; the framework now applies to more categories of lenders including small banks and NBFCS; and penal provisions have been introduced for lenders. This new framework is, no doubt, a better one.

I invite your opinions.

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Not a good scenario for borrowing and growth
Bhagawath Prasad | Sun Jun 16 15:09:26 2019
Currently ,torturous collection methods and rowdy behaviour of lenders is detrimental for growth of small businesses, RBI and government is not seriously aware of lender behaviours for just one pending instalment, can anyone handle 100 auto dialed calls and vists owners housees !! coercion and intimidation starts from one pending instalment, all of us aware of the fact that profits are knocked off by lenders thru their high rate of interest and charges,current collection aggression is not fit enough for investments and growth, if government wants deciplane ,they must make BIG businesses to pay upfront for supplies made by small businesses , if not it's simple one side batting to drag businesses to bankruptcy , government must open their eyes for controlling lender’s collection goons, if not SMEs will collapse and government can only divert funds for more free-schemes at district and taluk level businesses. Look at the scenario in last five years, expensive money , unaffordable power tariff , unaffordable air,road and rail travel, there by small bisinesseses are not growing today , BIG businesses houses keep using several tactics to delay payments to small business , that's thier DNA, now banks have joined them to push every small business to bankruptcy.Not a good scenario for growth

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