In The Media ⁽⁴⁰⁰⁾

Read full article Abstract: The banking sector, a major engine of growth, has been greatly underperforming in India. This is an inherited problem for the present government. Experts in finance had known for some years that the vast majority of the “restructured” loans would eventually turn into non-performing assets (NPAs). But the finance ministry and Reserve Bank of India (RBI) were slow to move towards a solution. Luckily, both of them have moved to take the NPA bull by the horns during the last year. Armed with the Banking Regulation (Amendment) Act, 2017 and subsequent authorisation by the government, RBI has issued definitive directions to banks for time-bound resolution of stressed assets including through the Insolvency and Bankruptcy Code (IBC), 2016. An impressive 40% of NPAs are now under the IBC process. Three other important developments towards strengthening the banking system have taken place. First, the finance ministry has moved decisively to recapitalise the banks. This is already yielding happy results in terms of credit growth.

The steps taken so far are not enough, in the longer run full modernisation of the banking sector will require further structural reforms, Panagariya says.Read full article The banking sector, a major engine of growth, has been greatly underperforming in India. This is an inherited problem for the present government. Experts in finance had known for some years that the vast majority of the “restructured” loans would eventually turn into non-performing assets (NPAs). But the finance ministry and Reserve Bank of India (RBI) were slow to move towards a solution. Luckily, both of them have moved to take the NPA bull by the horns during the last year. Armed with the Banking Regulation (Amendment) Act, 2017 and subsequent authorisation by the government, RBI has issued definitive directions to banks for time-bound resolution of stressed assets including through the Insolvency and Bankruptcy Code (IBC), 2016. An impressive 40% of NPAs are now under the IBC process. Three other important developments towards strengthening the banking system have taken place. First, the finance ministry has moved decisively to recapitalise the banks. This is already…

Read full article Abstract: Other than the Swachh Bharat Mission, ‘Ayushman Bharat’ is potentially the most far-reaching social programme initiated by Prime Minister Narendra Modi. For the first time, the programme gives vulnerable families hope that they will be able to escape financial ruin when faced with illnesses requiring hospitalisation. Though the media has focussed disproportionately on the National Health Protection Scheme (NHPS) aimed at covering 100 million households for secondary and tertiary care, Ayushman Bharat also includes a component that proposes to strengthen primary healthcare. This latter component would establish 1,50,000 Wellness Centres. To ensure success, it is important that enough thought goes into designing the two schemes. More than five decades worth of experience with the provision of primary, secondary and tertiary healthcare by the government have been deeply disappointing.

Read full article With approximately one year left before voting for the next Lok Sabha elections begins, you would expect the government to be seized by populism. Not the Modi government. On the heels of a pragmatic Budget, the human resource development (HRD) minister Prakash Javadekar has now announced the most far-reaching reforms in higher education. One of us (Panagariya) had lamented for long that the reforms in this important area had been cursed, with HRD minister after HRD minister failing to bring about fundamental change. Magically, Javadekar has broken that curse. By way of background, during past several years, multiple commissions and committees have recommended reforms but failed to bring about any substantive change in the core regulations under the University Grants Commission (UGC) Act. Undeterred, in June 2017, the Prime Minister’s Office (PMO) appointed a committee at the Niti Aayog to recommend how progress could be made in this important area. One of us chaired that committee while the other joined it as an invited expert member. It is nothing short of a miracle that Niti committee was…

A new generation of babus seems to have now replaced its more enlightened predecessor. It is about to erect the wall of protection all over again, Panagariya said.Read full article When GoI raised custom duties on a number of products in December 2017, as an eternal optimist, I took the view that this had been done for revenue reasons. But increases in duties on a long list of products ranging from kites and footwear to cellular mobiles phones and motor vehicles in Budget 2018 have ended that optimism. Indeed, revenue secretary Hasmukh Adhia has explicitly stated that the duties have been levied, not to raise revenue, but to provide protection to micro, small and medium enterprises (MSMEs). Adhia adds, “We have a phased manufacturing programme in electronic manufacture industry for which increasingly we will be putting more duty on the final product, then on second level of spare part and third level of spare part.” The Great Wall of India The clear message from the revenue secretary: stay tuned, more tariff hikes are on the way. For those of us old…