T N Ninan’s article, “Economy at the cusp” (March 25), rightly reflects positive macroeconomic developments. More significant game changers would obviously be the enlarged base of the formal economy due to demonetisation and the goods and services tax.
Formation of differentiated banks, thrust on digital banking, financial inclusion and resurrection of the banking system by finding an appropriate solution for bad debts will make banks stronger for accelerated credit linkage.
The sluggish credit to GDP ratio needs to be raised to harness the full potential of the enterprises. Moving away from bank credit is not a good sign for banks. As robust financial intermediaries, they are essential to support the hinterland, which can neither access bond markets nor foreign financial sources.
The benefits of positive economic developments and improved diplomatic ties with major trading partners can work well, provided policymakers can bring more rigour in implementing policies with concomitant micro reform; setting up a technology-led quick monitoring mechanism to assess outcome of well-thought-out policies; providing stable leadership at the CEO level to hold them accountable; greater orientation of regulators towards growth and development moving beyond the prism of scanning operations of market players.
Unless emerging opportunities are supported by a strong network of micro reforms at the industry level, the combination of good spells may lapse into a non-event. An appropriate time may not arrive again soon.
K Srinivasa Rao Pune
