speech on the disturbed economy of India in 2020 . 80 words
Answers
India – caught out in the wrong side of time?
India’s growth was slowing down in a secular trend even before the advent of COVID-19 and lockdown-related shocks. The slowdown has exacerbated the twin balance-sheet issue confronting India. This comprises stretched corporate leverage and concomitantly stressed bank (and Non Banking Financial Companies, or NBFC) balance sheets. Consequently, the financial system—which is the primary conduit and increasingly the primary source of intervention in the real economy—is far too weak to effectively play a big part. 2020 was supposed to be a break-out year—aided by some global tailwinds and base effect, there was expectations of a bounce-back in growth. Unfortunately, COVID-19 put paid to those calculations. In short, India is faced with a double-jeopardy scenario—a weakening base of growth and a weakened set of financial institutions that are unable to front-load risk-taking. Add to it the unwillingness (or the inability) of the government to print money to take us out of this slowdown.