The epidemic, and the responses to it, have created stress for a lot of firms. A sound financial system will put out a lifeline for some. The financial system has to understand the changed environment, and do a triage in the allocation of capital. Efficiency in capital allocation means that not all firms should be saved. This drama will consume a good slice of the firms of India in 2020 and 2021. We also have to worry about the state of health of parts of the financial system.
When a bomb goes off in a coffee shop, the task of the
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