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18
April 2018
 |
IMF(The
Total Investment & Insurance Solutions)
The
International Monetary Fund (IMF) has urged India to strengthen the ability of
banks to go after debtors and warned that debts negatively impact investments.
"The
corporate debt overhang and associated banking sector credit quality concerns
exert a drag on investment in India," the IMF's World Economic Outlook
report released on Tuesday said.The
Total Investment & Insurance Solutions
While
the 2017 recapitalisation plan for major public sector banks "will help
replenish capital buffers and improve the banking sector's ability to support
growth", it "should be part of a broader package of financial reforms
to improve the governance of public sector banks, and banks' debt recovery
mechanisms should be further enhanced," the report said.
Underlining
the seriousness of the bad loans or non-performing assets problem, the Reserve
Bank of India said in a December 2017 report that such loans were 10.2 per cent
of all the banking assets till September 2017 and was projected to grow to 10.8
per cent by March and 11.1 per cent by September 2018.
Bad
loans issue has come to the fore in India in recent months with the disclosure
of fugitive jewellerNiravModi's alleged $2 billion-scam involving the Punjab
National Bank.The Total Investment
& Insurance Solutions
Another
cautionary note in the IMF report said: "India's high public debt and
recent failure to achieve the budget's deficit target call for continued fiscal
consolidation into the medium term to further strengthen fiscal policy
credibility."
Overall,
"the medium-term growth outlook for India is strong," the report
said.
"Growth
is expected to gradually rise with continued implementation of structural
reforms that raise productivity and incentivise private investment," it
added.
The IMF
reiterated that India was on its way to achieve growth rates of 7.4 per cent
for 2018 and 7.8 per cent for 2019 - the highest globally for major economies.
The
report pointed out that it "has made progress on structural reforms in the
recent past, including through the implementation of the goods and services
tax, which will help reduce internal barriers to trade, increase efficiency,
and improve tax compliance."The
Total Investment & Insurance Solutions
But it
stressed that India's important challenge is to enhance inclusiveness for which
further reforms are needed.The Total
Investment & Insurance Solutions
"The
main priorities for lifting constraints on job creation and ensuring that the
demographic dividend is not wasted are to ease labour market rigidities, reduce
infrastructure bottlenecks, and improve educational outcomes," it said.The Total Investment & Insurance
Solutions
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