Chief economic adviser (CEA) V. Anantha Nageswaran believes India is well placed among its peer countries amid global uncertainties caused by the ongoing Russia-Ukraine war.
"An improved financial system and a strong corporate sector have made India better-placed among other nations, including advanced countries, amid global uncertainties caused by the ongoing Russia-Ukraine war," Mint reported, quoting chief economic adviser Nageswaran saying so.
“Compared to other nations, even among advanced countries, I think India is relatively better-placed for the simple reason that India paid a certain price last decade... we had a banking system stress which was then compounded by stress in the non-banking financial sector towards 2018,” the CEA said.
The recent reforms initiated in the financial sector such as the bankruptcy code have made banks capable of lending more and supporting growth.
"India introduced a new bankruptcy code and put in place an ecosystem for bankruptcy resolution in 2016, replacing an old system that had led to excessive delays and asset erosion while tackling industrial sickness. With the resolution of a large portion of bad debt and better provisioning, the banking sector is back in a position to lend more to support growth," the Mint report said.
"The improved financial health of banks and the corporate sector has brought a conducive climate for higher growth-generating investment in the economy. Businesses have deleveraged their balance sheets in the last couple of years, making fresh investments possible," the report added further.
The CEA said India may grow by 7-8 percent this year but that will depend on the duration of the ongoing conflict. RBI, in its April policy, trimmed the growth estimated to 7.2 percent from the earlier 7.8 percent for the current fiscal year.
The CEA underscored that the ongoing Ukraine war had shot up commodity prices and disturbed the global economy.
“While inflation is one aspect of it, food security is another aspect. Thankfully in India, we are relatively far more comfortably placed than others. But there are several countries where the availability of food is more important than even the price,” he said, as per the Mint report.