India's zombie raj: Companies on life support, and distressed banks

Given Indian corporates' high indebtedness, new credit will be used for servicing loans rather than building factories. This is setting us up for more companies on life support and more zombie banks

The old line that it was the job of the Federal Reserve “to take away the punch bowl just as the party gets going” needs to be reworked. The metaphor referred to the large silver bowls filled with juice, lemonade, fruit often spiked with alcohol that were so popular at parties in the 1950s and 1960s. But, what it meant is that it was the job of the central bank governor to raise interest rates when the economy was getting giddily overheated by way of retail prices or asset bubbles.
 
Today, it is the central bank governor who serves