The finance ministry, which is in the process of preparing the Union Budget for the next fiscal year would be well advised to consider some of the suggestions of the International Monetary Fund (IMF) made in its report on India. The IMF has listed reform measures that might help India increase economic growth to the baseline medium-term potential of 7.3 per cent. First, the clean-up of bank balance sheets should be completed along with strengthening governance in public sector banks (PSBs) and better oversight of non-banking financial companies (NBFCs). Although the government has infused a significant amount of capital into PSBs, there is practically no movement in terms of governance reforms. In the absence of such reforms, PSBs would remain prone to the same errors and undermine an efficient allocation of credit, which will affect overall economic growth in the medium term. Further, the central bank will need to augment regulatory capacity for better oversight of the system, including the NBFC sector.
TO READ THE FULL STORY, SUBSCRIBE NOW NOW AT JUST RS 249 A MONTH.
Already a premium subscriber? LOGIN NOW
What you get on Business Standard Premium?
- Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
- Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
- Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
- Pick your 5 favourite companies, get a daily email with all news updates on them.
- 26 years of website archives.
- Preferential invites to Business Standard events.
Subscribe to Business Standard Premium
Exclusive Stories, Curated Newsletters, 26 years of Archives, E-paper, and more!
First Published: Wed, December 25 2019. 01:26 IST