Slowdown Blues: It's not ordinary but 'Great Slowdown', Indian economy headed towards ICU, says ex-CEA Arvind Subramanian
Subramanian explains how after the NBFC crisis, banks turned cautious and stopped lending to small businesses, leading to a major fall in credit flow from Rs 20-lakh crore in FY19 to 'virtually nothing' in current fiscal
- Dec 14, 2019,
- Updated Dec 14, 2019 8:39 PM IST
Former Chief Economic Adviser Arvind Subramanian has said the Indian economy was headed towards an "intensive care unit" and that a "Great Slowdown" was imminent. The former chief economic adviser said the country was experiencing what he calls the "second wave" of Twin Balance Sheet (TBS) crisis, which will further lead to an even bigger damage to the economy.
"Look at electricity generation growth, it's falling off the bottom, and it's never been like this ever. So this is the sense in which I would say this is not just any slowdown, this is the great slowdown that India is experiencing and we should look at it with all seriousness ...and the economy seems headed for the intensive care unit," Arvind Subramanian said during a discussion on his draft working paper published at the Harvard University's Centre for International Development said.
Subramanian has co-authored the paper with the former head of the International Monetary Fund's India office, Josh Felman. In this paper, Subramanian and Felman have termed India's current economic crisis as "TBS-2" crisis.
Subramanian, who currently teaches at Harvard Kennedy School, had highlighted the TBS problem for the first time -- the issue of private companies turning into NPAs (non-performing assets) -- way back in December 2014 when he was the CEA under the previous Modi government.
While in TBS-1, loans were offered to big corporates in steel, power and infrastructure sectors, which later turned into NPAs, TBS-2 emerged after demonetisation, maintains the paper.
Edited by Manoj Sharma
Former Chief Economic Adviser Arvind Subramanian has said the Indian economy was headed towards an "intensive care unit" and that a "Great Slowdown" was imminent. The former chief economic adviser said the country was experiencing what he calls the "second wave" of Twin Balance Sheet (TBS) crisis, which will further lead to an even bigger damage to the economy.
"Look at electricity generation growth, it's falling off the bottom, and it's never been like this ever. So this is the sense in which I would say this is not just any slowdown, this is the great slowdown that India is experiencing and we should look at it with all seriousness ...and the economy seems headed for the intensive care unit," Arvind Subramanian said during a discussion on his draft working paper published at the Harvard University's Centre for International Development said.
Subramanian has co-authored the paper with the former head of the International Monetary Fund's India office, Josh Felman. In this paper, Subramanian and Felman have termed India's current economic crisis as "TBS-2" crisis.
Subramanian, who currently teaches at Harvard Kennedy School, had highlighted the TBS problem for the first time -- the issue of private companies turning into NPAs (non-performing assets) -- way back in December 2014 when he was the CEA under the previous Modi government.
While in TBS-1, loans were offered to big corporates in steel, power and infrastructure sectors, which later turned into NPAs, TBS-2 emerged after demonetisation, maintains the paper.
Edited by Manoj Sharma