Thread by @arvindsubraman

1/n My @Kennedy_School paper w/ @FelmanJosh "India's Great Slowdown:What Happened?What's the Way Out?" hks.harvard.edu/centers/cid/pu…
Discussion w/ @PrannoyRoyNDTV @ndtv:
Presentations @BIC_Blr: & @orfonline:
Thread

2/n Latest indicators suggest slowdown is more serious than headline GDP numbers imply. Growth of macro-indicators of investment, consumption, trade, taxes and electricity are all negative or barely positive.

3/n Comparing with other episodes (1991 and 2000-02) of slowdowns, macro-indicators suggest this is sharpest since 1991. Hence the “Great Slowdown”.

4/n What Happened? Several structural & cyclical factors but link is Balance Sheet problems which arrived in 2 waves. TBS-1 arrived when mid-2000s boom left corporates (infra.) over-indebted & banks saddled with non-performing assets (NPAs). Problem not fully resolved.

5/n Then came TBS-2. Non-bank financial companies (NBFCs) over-expanded, financing unsold inventory of real estate. Bursting of "non-bubble bubble" led to savage credit contraction. Now a Four Balance Sheet Challenge

6/n Outlook sober since problems are mainly structural. Economy has entered a vicious cycle: balance sheet stress is slowing growth, while slowing growth is worsening bad loans. Reflected in large & rising gap between cost of borrowing & growth rate for govt. and private sectors

7/n Way forward?
1.Data Big Bang. Revamp data-GDP, employment, consmpn., fiscal, & fin'l sector-to restore trust in govt. & get reliable figures for policy-making. Off-balance sheet spending must be in budget. Govt. has made good start: indianexpress.com/article/opinio…

8/n Way Forward?
2. Address Balance Sheet problem. Revamp Insolvency & Bankruptcy Code so bankers, promoters and judiciary have greater incentives to resolve bad loans quickly. Create bad banks for power and real estate sectors: indianexpress.com/article/opinio…

9/n. Way Forward?
3. What *NOT* to do: adding fiscal stimulus; cutting income tax rates; raising GST rates now; blaming GST when problem is weak economy. Revamp GST rate structure after economy stabilizes: business-standard.com/article/opinio…

n/n Conclusions: Challenges ahead stiff. Much needs to be done. No magic bullets.Traditional macro-tools limited. Must avoid complacency when first “green shoots” of recovery appear. Equally must avoid fatalism of “traps” as way out of Great Slowdown is in the nation’s hands.

@Kennedy_School @FelmanJosh @PrannoyRoyNDTV @ndtv @BIC_Blr @orfonline 1/n My @Kennedy_School papr w/ @FelmanJosh "India's Great Slowdown:What Happened?What's the Way Out?" hks.harvard.edu/centers/cid/pu…
Presentations @BIC_Blr: & @orfonline: Discussion w/ @PrannoyRoyNDTV @ndtv:
Thread

@Kennedy_School @FelmanJosh @PrannoyRoyNDTV @ndtv @BIC_Blr @orfonline Apologies. I got the order of the links wrong. If there is one video to watch, I recommend the discussion with @PrannoyRoyNDTV @ndtv: