Financing a recovery

It needs a deeper bond market, not a subsidised bank

India’s economic recovery depends crucially on restoration of private sector investment. However, there are serious blockages in the investment pipeline. In particular, the widespread and severe asset quality crisis in public sector banks may be causing a lending slowdown. In 2016-17, the rate of growth of bank credit fell to just over 5 per cent — the lowest in 60 years. The obvious way to fix this blockage is to address head on the problem of non-performing assets. However, other viewpoints are also receiving their day in the sun, such as creating new financial institutions specialising in wholesale and long-term