Pune: Although most of the parameters by which the health of an economy are judged are positive in India, questions are being raised internally and globally on why the Indian economy is not growing faster. According to Finance Secretary and Secretary for Expenditure, Government of India, Ashok Lavasa, one of the main reasons for this is the low credit off-take in the country.
“When you look at the macro economic fundamentals of the country, they are sound. Be it Current Account Deficit, the way the inflation has behaved in the last two to three years, the way the government has managed fiscal deficit. Most of the parameters by which health of an economy are judged are positive, yet there are questions being raised on why the Indian economy is not growing fast and not able to match expectations of people here and globally. One of the reasons cited for this is the low credit offtake and the consequent slowdown in participation of the private sector in the process of economic growth,” Lavasa said.
He was delivering the inaugural address for a workshop on ‘Insolvency and Bankruptcy Code 2016’ organised by National Institute of Bank Management (NIBM) in Pune on Tuesday.
Among the dignitaries present at the event were Chairman of Insolvency and Bankruptcy Board of India (IBBI), MS Sahoo and officials from various banks in the country. Director of NIBM, KL Dhingra said the workshop has been organised to provide knowledge about the new ecosystem of IBC created for resolution of NPAs and recovery in a time-bound manner.
Lavasa said The Insolvency and Bankruptcy Code, 2016 and the IBBI are critical in light of the ballooning Non Performing Assets (NPA) in the Indian banking system. “Reports have suggested that law enforcement in India, both in terms of process and institutions requires more reforms. The process has to be faster and reliable. There is a need to create an ecosystem in which people are not able to distort the system or take advantage of the law and use it for their vested interest. In the last two to three years, the government has taken several steps in which policies and institutions have been created and amendments made. One of the most important and positive steps of the government has been to address the issue of Insolvency and Bankruptcy by creating an institution,” he stated.
What Lavasa said
† The Insolvency and Bankruptcy Code, 2016 is solution and resolution oriented with a time-bound approach to address the rising NPAs.
† Four to five challenges that will be faced during this process include finding the right insolvency professionals, safeguarding consumer interests, higher levels of provisions and need to set aside capital by banks to refer cases to the IBC, recapitalisation and continue to introspect why we are in this situation.
† More that half the NPAs are accounted by only 30 to 40 cases. The government is supporting recovery of stressed assets.