Clouded economic possibilities require deep reforms, but the political leadership that can carry out the responsibility is “missing” in the country and is relying too much on the administration which cannot do the duty, a senior financial sector specialist told on Thursday.
Ananth Narayan, a financial market official who has now become an academic, said there is an over-reliance on the government for decision-making and the nation is also dropping technocrats having a deep understanding of stressed divisions like banking and power.
The remarks come at a time when the already striving economic growth is estimated to go into negative because of the pandemic COVID-19, with some critics securing a GDP reduction of up to 9.5 per cent. The government has declared a Rs 21 lakh crore package to catch the slide and also proclaimed a spate of improvements in sectors like agriculture.
Narayan, who is presently a faculty member at the city-based management institute Bhavan’s SPJIMR, stated in the short-run there would not be disadvantageous discovery progress on the economic front as the problems have been admitted, but suggested that the issues like bad assets in the financial system would come to light in the upcoming fiscal year.
“Firstly, there has to be a recognition that there is an obstacle. If we begin by saying that there are green shoots around us and everything is subtle, I don’t believe those reforms will come around,” he said, emphasising on demand for deep reforms. “Second thing I would prefer to view in Delhi, to be impartial, is something ahead just an empowered administration.
I believe we are dropping out on political leadership and direction as far as the economy is affected,” he said through a call coordinated by the brokerage Dolat Capital. “At the time, the number of decision making appears to be by bureaucrats, which to me, something which appears in the form of deep reforms,” Narayan added.
Narayan, who was lately selected as the RBI’s nominee director on the board of the crisis-hit Yes bank after the bailout, said his “diagnosis” for the economy is not so proper, but this is not the conclusion of the world unless and listed out operations in which reforms are essential.
These comprise the financial services ecosystem that will not collapse due to interruptions from the RBI and the government, but is not able complete of funding the growth ambitions, he told, adding the reforms ought to be “true” and need to go away “token privatisation” or another round of strengthening.
Likewise, divisions such as power, shipping, telecom, and small businesses also demand improvements, he told, adding that the country also requires to look at methods of creating enough locally in order to decrease imports. The newly announced restructuring plan by the RBI is the most suitable that the central bank could do, but there are not adequate exposures on both the interims and loan restructuring, he said.
“…between now and the time restructuring is concluded, we will not have data on genuine concerns in the financial services ecosystem because there is no individual mandated disclosures about the moratorium, which sector, etc. We will be operating accidentally for a consistent period of time, maybe till the middle of next year, before you know the best level of pressure (is known), he told.
He added that boosting banks and non-banking finance companies to support capital without revealing the exact nature of the book is a ‘moral hazard’.