"Inflation Band Has Served the RBI Well , Tampering With It Could Raise a Credibility Challenge"
The Wire
2021-06-03
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In a special conversation with Mitali Mukherjee, Former RBI Governor Mr D Subbarao
Said the K-shaped recovery India’s economy is witnessing, is a matter of grave concern. He also said the MSME space was still stressed and there were signs the RBI’s estimate of bad loans was close to reality and could even be higher than the indicated figure. ( The share of bad debt in the Indian banking system could increase to as much as 14.7 per cent by March 2021 if the macroeconomic environment worsens further, the Reserve Bank of India (RBI) said in its financial stability report in July 2020)
The former Reserve Bank governor also pointed to the rising debt to GDP ratio and warned that escalated interest payments were not a fiscally sound path for emerging economies like India. Rating agency Fitch expects public debt/GDP for India to rise above 90 per cent of GDP over the next 5 years. The general government debt/GDP ratio stood at 72 percent in 20 19 vs 42% for 'BBB' rated peers.
In answer to a question by Mitali Mukherjee on how unequal the COVID induced economic recession has been, Mt Subbarao said the government must ensure the bottom half of India’s population also recovers. Helping the segments in pain is not just a moral issue, it is an economic issue, he believed.
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Said the K-shaped recovery India’s economy is witnessing, is a matter of grave concern. He also said the MSME space was still stressed and there were signs the RBI’s estimate of bad loans was close to reality and could even be higher than the indicated figure. ( The share of bad debt in the Indian banking system could increase to as much as 14.7 per cent by March 2021 if the macroeconomic environment worsens further, the Reserve Bank of India (RBI) said in its financial stability report in July 2020)
The former Reserve Bank governor also pointed to the rising debt to GDP ratio and warned that escalated interest payments were not a fiscally sound path for emerging economies like India. Rating agency Fitch expects public debt/GDP for India to rise above 90 per cent of GDP over the next 5 years. The general government debt/GDP ratio stood at 72 percent in 20 19 vs 42% for 'BBB' rated peers.
In answer to a question by Mitali Mukherjee on how unequal the COVID induced economic recession has been, Mt Subbarao said the government must ensure the bottom half of India’s population also recovers. Helping the segments in pain is not just a moral issue, it is an economic issue, he believed.
Like our work? Click here to support The Wire: https://thewire.in/support
The founding premise of The Wire is this: if good journalism is to survive and thrive, it can only do so by being both editorially and financially independent. This means relying principally on contributions from readers and concerned citizens who have no interest other than to sustain a space for quality journalism. As a publication, The Wire will be firmly committed to the public interest and democratic values.
We publish in four different languages!
For English, visit www.thewire.in
for Hindi: http://thewirehindi.com/
for Urdu: http://thewireurdu.com
for Marathi: https://marathi.thewire.in
If you are a young writer or a creator, you can submit articles, essays, photos, poetry – anything that’s straight out of your imagination – to LiveWire, The Wire’s portal for the young, by the young. https://livewire.thewire.in/
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